Be careful what you write or say

B1Many people may not consider the things that they say in public or write online. This is often because of the right of freedom of expression. However, defamation can be a harsh reality for those who believe they can say what they want without consequences.

Typically, the law of defamation attempts to strike a balance between a plaintiff’s right to reputation, and a defendant’s right to freedom of expression – two rights that are recognised both at common law and in the Constitution. Defamation should be considered seriously when interacting with others through letters, e-mails and general discussions.

What if I think someone has defamed me?

You (the plaintiff) would first need to prove that a comment regarding you was publicised (to someone else) and secondly, that the comment was prima facie (obviously) defamatory. Once this has been determined the onus is on the other person (defendant) to prove that his/her conduct was not wrongful. In other words, that they did not intentionally try to defame you.

Wrongfulness is based on intent as opposed to negligence. Even where it remains that the comment was wrongful, the defendant might still have several defences like:

  1. Truth of the statement;
  1. That the comments are in public interest;
  1. That the comment was just an opinion and not given as a fact;
  1. That the comment was fair under the circumstances;
  1. That the comment was made under circumstances of qualified privilege, where the defendant had a duty and someone else had a duty to receive the comment.

But the comment was the truth?

The fact that the comment was the truth does not mean that it isn’t defamatory. The test to determine defamation is whether a reasonable person of normal intelligence would view it as defamatory. The defendant can succeed with his defence of fair comment and public interest if no element of maliciousness is involved. The plaintiff only has to prove that the comment was prima facie defamatory of his/her character and that it was publicised.

So if someone has stolen something, and has been convicted of the crime, it’s not defamatory to call them a thief. However, if someone has only been accused of theft and has not yet been convicted, calling them a thief of out spitefulness could be considered defamatory. This is simply because being called a thief could hurt their reputation and whether or not they stole something has not yet been determined to be true.

Publication can be to a specific person or within hearing distance of the general public and is material if heard by or publicised by the public in a book, postings on websites, or bulletin boards on the Internet. The onus is on the defendant to prove their defences. If there are two versions before a court it should decide on the most probable version under the circumstances.

In a democracy, forthright criticism, wild accusations and innuendos – often unfair and unfounded – are part and parcel of political activity. Right-thinking people in society generally do not think less of politicians who are subjected to derogatory statements by opposing politicians or political commentators. The context might cause material that would otherwise have been defamatory, to be no more than mere abuse. Courts allow wide latitude for political debate and politicians should not be over-hasty in complaining. Nonetheless, it is important to note that courts extend latitude, not immunity, and there are limits. A distinction must also be drawn between an unwarranted attack on the dignity and reputation of a politician and an attack on the person’s political views, policies and conduct. Courts have to give effect to the values of openness, transparency and accountability, yet protect dignity and privacy. It seems that the bounds are exceeded where improper motives or dishonourable conduct is imputed.

References:

  • Law of South Africa, Volume 8(1) – Second Edition Volume
  • Delta Motor Corporation (Pty) Ltd, vs Van der Merwe, 2004 (6) SA 185 (SCA)
  • Constitution of the Republic of SA, 1996 ss 10 and 16
  • National Media Ltd vs Bogoshi, 1998 4 All SA 347 (SCA)

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

Owning property without a Will

B2If you die without a Will, an administrator will have to be appointed to administer your estate which will be distributed according to the laws of intestate succession. As such, your assets may not be distributed as you would have wished. It also means that the process will be delayed and that there will be additional expense and frustration which most people would not want to inflict on their loved ones during a time of loss.

Marriage and property

When drafting your Will, it’s important to consider the nature of your relationship with your ‘significant other’. If you are married in community of property, you only own half of all assets registered in your name and that of your spouse. Your spouse therefore still remains a one half share owner of any fixed property you may want to bequeath to a third party which could potentially present difficulties.

If you are married in terms of the accrual regime, the calculation to determine which spouse has a claim against the other to equalise the growth of the respective estates only occurs at death. Your spouse may therefore have a substantial claim against your estate necessitating the sale of assets you had not intended to be sold.

Alongside your Will, you should also prepare the following in relation to any immovable property you may own:

  1. State where your title deeds are kept and record any outstanding bonds and all insurance
  2. File up-to-date rates and taxes receipts
  3. Record details of the leases on any property you have
  4. State who collects your rent
  5. State who compiles your yearly accounts
  6. State where your water, lights and refuse deposit receipts are kept

If you die without a Will

According to the according to Intestate Succession Act, 1987, your estate will be distributed as follows:

  1. Only spouse survives: Entire estate goes to spouse.
  2. Only descendants survive: Estate is divided between descendants.
  3. Spouse & descendants survive: The spouse gets R2 500 000 or a child’s share and the balance is divided equally between the spouse and descendants.
  4. Both parents survive: Total share is divided equally between both parents.
  5. One parent: Total Estate goes to the parent.
  6. One parent & descendants: Half the Estate goes to the parent; balance is divided equally amongst descendants.
  7. No spouse; No descendants; No parents; but descendants through mother & descendants through father: Estate divided into two parts: half to descendants through mother; half to descendants through father.
  8. No spouse; No descendants; No parents; No descendants through mother or father: Full Proceeds of the Estate has to be paid into the Guardians Fund in the event of no descendants whatsoever.

References:

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

What are tenant and landlord duties?

article2_img_blogWhen it comes to letting a property – both the tenant and the landlord should always enter into any letting agreements openly and honestly and intending for each party to get proper value. Often it’s the approach which the parties adopt which will determine whether the relationship between the parties and the benefits they derive therefrom is mutually satisfactory. Furthermore, there are important duties that each party is expected to do.

Non-Statutory Law (Common Law)

The tenant is obliged to:

  • Pay the proper amount of rent in the proper commodity at the proper place and time.
  • Take good care of the property and not use it for other purposes than for which it was let.
  • Restore it to the same condition that he received it at termination of the lease.
  • Common law states simply that the full rent must be paid at the proper time – the time and date agreed by both the tenant and the landlord. It does not provide the tenant with a 7-day grace period.

Statuary Law (The Rental Housing Act)

The tenant is obliged to:

  • Make prompt and regular payment of rent and other charges payable in terms of the lease.
  • Make payment of a deposit – the amount of which should be agreed upfront between the landlord and tenant.
  • Have a joint incoming and outgoing inspection with the landlord.

The property owner

The prime duty of a property owner is to give a tenant occupation and control of the property. Furthermore, the owner has to maintain the property in its proper condition, subject to fair wear and tear (defined as the ‘unavoidable consequence of the passage of time’). The owner must also ensure that normal running repairs to the property are carried out.

A second important duty of the owner is a guarantee that the tenant will enjoy the undisturbed use and enjoyment of the property for the duration of the lease. This duty has three facets:

  • The property owner must not unlawfully interfere with the tenant’s rights although he or she is entitled, in certain circumstances, to interfere lawfully if, for instance, the tenant has to vacate the premises temporarily to allow necessary repairs to be done. Although an owner also has a right of inspection, this right must be exercised in a reasonable manner.
  • The owner must protect the tenant against being disturbed by ‘third parties’ who may claim a stronger right to the property than the tenant. For example, if you sub-let property from a lessee whose lease is invalid (perhaps because it has not been drawn up properly), you could be evicted by the original owner of the property. If this happens, the person who sub-let the property to you is obliged to protect you from being evicted.

Reference:

http://www.privateproperty.co.za/advice/property/articles/tenants-rights-and-obligations/559

http://www.legalcity.net/Index.cfm?fuseaction=RIGHTS.article&ArticleID=2663821

http://www.chaseveritt.co.za/tenant-rights-south-africa

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

Consider your claim carefully: Some of the need to know facts in the event of a third-party claim against the RAF (Road Accident Fund)

article1_img_blogThe Road Accident Fund (hereinafter referred to as the RAF) has over the years created the assurance that public road users will be covered in the event of any motor vehicle accident which caused either injuries or death, and for the losses suffered thereby, such as medical expenses, loss of earnings and even general damages (damages for pain and suffering).

Before the Road Accident Fund Amendment Act 19 of 2005, which came into operation on 1 August 2008, this had the effect of any person simply being able to institute a claim against the RAF in any event of an accident which amounted to damages suffered as a result of injury or death, or even a claim based on pain and suffering. This sounded simple enough, that is until the Road Accident Fund Amendment Act 19 of 2005 came into operation, placing two very important limitations on claims from the RAF.

The first limitation relates to claiming from the RAF and/or the wrongdoer. In respect of the old Road Accident Fund Act 56 of 1996, the victim who had a limited claim against the RAF, still had a common law claim against the wrongdoer in respect of the excess amount not compensated for by the RAF. This meant that should the road accident victim only be compensated by the RAF for a portion of the damages suffered during the accident, the remaining portion could still be claimed from the wrongdoer in his personal capacity. For example, if victim X suffered damages in the amount of R200 000 and the RAF only compensated the victim in the amount of R150 000, the remaining R50 000 could still be recovered from the wrongdoer in person. This would have the effect of two separate claims. However, should the victim have received full compensation in terms of Section 17 of Act 56 of 1996 for the amount of R200 000, such victim would not have another claim against the wrongdoer.

In terms of the new Road Accident Fund Amendment Act this common law right has been abolished by the institution of Section 21 of the Road Accident Fund Amendment Act. The victim will currently only be able to claim/recover losses or damages suffered as a result of a motor vehicle accident from the RAF. There can be no more separate claims in respect of one cause of action.

The second important amendment is a part of Section 21 which places a cap on the amount of loss of earnings claimed and the amount of general damages claimed, i.e. damages claimed for pain and suffering.

With regard to the capped amount allowed to claim for loss of earnings, a victim is only allowed to claim damages up to the amount of R160 000, but this amount changes quarterly according to the fluctuation in interest rates and currently it stands at R201 337 per annum as from October 2012. Should the victim earn a salary of more than the said amount per annum, he or she will be unable to institute such a claim against the RAF. / Should the victim earn a salary of more than the said amount per annum, his or her claim will be limited to the amount dictated by the Law.

Furthermore, with regard to a claim for  based on injuries suffered, the claim will only succeed if the victim can prove that he/she has suffered “serious injuries” as defined in the Act. This would amount to injuries sustained which has ultimately rendered such victim at least 30% disabled in his or her everyday life. This limitation does not take into consideration any personal circumstances. Similarly, no common law right exists to institute a second claim against the wrongdoer in the event of failure against the RAF.

Also important to remember is the fact that when consideration is given to medical expenses suffered, the amount is calculated according to the rate charged at a public level (public hospital rates) and not at a private level (private hospital rates).

In conclusion, it is important to remember that the RAF takes over the liability of the wrongdoer in such accidents, meaning that actions must be instituted against the RAF and not the wrongdoer in the first instance. The exception is where the RAF is unable to pay compensation or where emotional shock is suffered. In such a case, the action may be instituted against the wrongdoer in person. Any action instituted against the RAF is a time-consuming process and requires due consideration before proceeding. Section 21 of the Road Accident Fund Amendment Act has definitely placed limitations on claims that need to be borne in mind.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

Traffic Officer confiscates my cell phone: What you should know!

Summary

Since 2011 the City of Cape Town: Traffic By-Law, 2011 has made it possible for an authorised officer to confiscate your cellular device if you are caught using it in your car while driving. If you end up getting caught red-handed, these are a few things you should know to make sure that all the correct procedures are followed when your cellular device gets confiscated.

Article

The City of Cape Town: Traffic By-Law, 2011 (hereinafter “the By-Law”) prohibits driving a motor vehicle on a public road, firstly, while holding a cellular or mobile telephone or any communications device with any part of the body and, secondly, while using or operating a cellular or mobile telephone or other communication device unless it is affixed to the vehicle (like a handsfree kit).[1]

According to the By-Law an authorised officer may, in the interest of public safety, confiscate a handheld communication device if he informs the owner of such device of the reasons for doing so. He must issue a receipt to the owner, stating the place at which such device may be claimed, and he must follow all procedures contained in any policy of the city dealing with the confiscation and impoundment of property.[2] The policy applicable in the City of Cape Town is called the Standard Operating Procedure on the Impoundment of Goods and Animals, 2012.

An authorised official exercising authority in terms of any By-Law of the City to impound goods, shall issue to the offending party a receipt for any property removed and impounded. This receipt must indicate:

  1. A list of the property to be removed and impounded;
  2. the physical condition of the goods (to ensure that they are returned in the same physical condition that they were in when impounded);
  3. the address where the impounded goods will be kept;
  4. the hours during which the goods may be collected;
  5. the maximum period for storage of goods before they are disposed of;
  6. the conditions for the release of the impounded goods;
  7. the name and office number of a council official to whom any representation regarding the impoundment may be made;
  8. the date and time by when representation must be made;
  9. the terms and conditions relating to the sale of unclaimed goods, by public auction, where no claim (and/or representation) is received.[3]

The City may sell any cellular device that hasn’t been claimed within ninety days after the date of impoundment through public auction which shall be advertised in local newspapers. Municipal officials and councillors, their spouses, relatives and acquaintances are prohibited from purchasing any of these impounded goods. Fees may be levied for the storage of the cellular device and any other expense incurred by the Council during impoundment. Said fees shall be determined by Council and may be adjusted from time to time. Fees and fines shall be paid at the Council cash office between the hours of 08:00 and 16:00 on Mondays to Fridays.[4]

Goods may be returned to the owner, or his or her representative, upon presentation of proof of payment of all fees related to the impounding and storage of the goods and any fines imposed prior to and/or during impoundment. Owners or their representatives can collect their goods during the hours and at the venue indicated in the impoundment notice served on the offender.[5]

Officials of the City must take reasonable steps to prevent any damage to impounded goods; however, it will not be responsible for any damage caused to goods where a reasonable duty of care was exercised. Digital photographs shall be taken of all impounded goods.[6]

A person who contravenes a provision of this By-Law commits an offence and a person who commits such an offence is, on conviction, liable for a fine or a term of imprisonment not exceeding 3 years, or both.[7]

Reference List:

  • The Standard Operating Procedure on the Impoundment of Goods and Animals, 2012
  • The City of Cape Town: Traffic By-Law, 2011
  • [1] S 38(1) of the City of Cape Town: Traffic By-Law.
  • [2] S 38(4) of the City of Cape Town: Traffic By-Law.
  • [3] S 8, S 9 of the Standard Operating Procedure on the Impoundment of Goods and Animals, 2012.
  • [4] S 10, S 11 of the Standard Operating Procedure on the Impoundment of Goods and Animals.
  • [5] S 12 of the Standard Operating Procedure on the Impoundment of Goods and Animals.
  • [6] S 16 of the Standard Operating Procedure on the Impoundment of Goods and Animals.
  • [7] S 39 of the City of Cape Town: Traffic By-Law.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

My dog just attacked someone

a1Due to circumstances beyond your control your dog bites someone. There is blood, an injury, and a shocked and angry victim. Luckily it is a small wound, but before you can mouth an apology, the traumatised person storms off with the words: “You’ll pay for this; see you in court!”

Are you liable for the damage caused by your dog?

Well, you could be, depending on the circumstances. Damages caused by a pet can be claimed from the owner through the Actio de Pauperie. You will be liable for damages if the complainant is successful in proving:

  1. that you were the owner of the animal at the time of infliction of the injury;
  2. that the animal is domesticated;
  3. that the animal acted contrary to the nature of a domesticated animal; and
  4. that the conduct of the animal caused the plaintiff’s damage.

How can you defend your dog?

The onus will be on you, as owner of the dog, to prove a valid defence. You will not be liable for the complainant’s damages if you can successfully prove:

  1. that your poor dog was provoked by the culpable conduct of the complainant;
  2. that someone else was in charge of your dog when the injury was inflicted, in other words a third party had control over the animal and the damage occurred due to that person’s negligence;
  3. the unlawful presence of the plaintiff on the premises, in other words that the injured person had no legal right to be there;
  4. that the plaintiff knew of the risk and voluntarily accepted the risk; and
  5. that the owner is not responsible for damages caused by his animal in terms of an existing indemnity agreement between the parties.

The circumstances and actions of the injured person will determine what happens. If someone came onto your property uninvited and got attacked by your dog, then it’s not your fault. However, if you were walking your dog in the park and they randomly attacked someone, without being provoked, then you are liable.

Owning a dog can be a very rewarding experience and a boundless source of unconditional love, but at the same time it also brings great responsibility. If you own a dog, you also have a responsibility to prevent it from causing harm to anyone or their property.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

GUTHRIE & THERON CALEDON:

LOSLITDAG:

Loslitdag is die land se grootste geldinsamelings –en bewusmakingsprojek vir persone met gestremdheid. Die personeel van GUTHRIE  –en THERON  in Caledon het vanjaar besluit op die hoedtema ter ondersteuning van loslitdag op 2 September 2016.

loslit

GUTHRIE & THERON CALEDON NEEM DEEL AAN DIRTOPHIA:

Op 10 September 2016 is Dirtophia se dirtophiaStaalwater – 7km pretdraf in Caledon aangebied.

Hierdie geleentheid word jaarliks deur Dirtophia aangebied en word ondersteun deur deelnemers van heinde en verre.

dirtophia2

GUTHRIE & THERON CALEDON se  prokureurs personeellede en eiendomsagent het deelgeneem.

Dit was ‘n spanbou-geleentheid wat baie geniet is.

 

Prokureurs:
Charl Cilliers charl@gtlaw.co.za en Liana Swart  ( 0282121060 )
Eiendomsagent :
Antoinette du Toit, ( 082 417 9611 )

 

Is it beneficial to create a trust?

A2A Trust can be described as a legal relationship which has been created by the founder, who places assets under the control of Trustees. This either happens during the founder’s lifetime (inter vivos trust) or at the death of the founder (testamentary trust). This article will focus on the advantages and disadvantages of an inter vivos trust.

The advantage of a trust is firstly, that inter vivos trusts can be used to minimise estate duty. No estate duty should be payable on assets owned by the Trust as a Trust does not terminate or come to an end, since it has perpetual succession. Estate duty is currently taxed at 20% of the gross estate value. This saving in estate duty can be substantially large, especially for high net worth individuals who are worth millions of rands. Secondly, as the Trust’s assets are not owned by the beneficiaries, the creditors of the beneficiaries do not have a claim regarding the assets of the Trust. This advantage is especially important for people who are exposed to potential liability. Companies as well as individuals are able to transfer assets to Trusts. Lastly, because Trusts have perpetual succession, beneficiaries will be able to continue enjoying the benefit of the Trust assets even if one of the Trustees were to pass away.

The disadvantages are firstly, the costs of setting up a Trust, which can be high. It may cost up to R 20 000 to set up a Trust. If immovable property is transferred to the Trust then transfer duty needs to be paid. The founders of the Trust may also be liable to pay Donations tax, which is taxable at 20% of the value of the assets transferred to the Trust. Transfer duty is taxed according to a sliding scale. Secondly, Trustees could find themselves personally liable for losses suffered by the Trust if it can be proven that they did not act with care, diligence and skill in terms of section 9 of the Trust Property Control Act. It is important to note that “skill” requires more than just acting in good faith. Trustees may be proven to be negligent not only if they invested in risky investments, but also if they invested capital too conservatively, causing the capital not to grow sufficiently. Trustees also need to be aware of the fact that they can still be held liable if only one Trustee has signing power on behalf of the Trust and he/she makes a poor decision that holds all the Trustees liable for his negligence.

The founder of the Trust needs to recognise that the assets in the Trust do not belong to him/her anymore. The assets belong to the Trust. Should this loss of control (from founder to Trust) not occur, the Trust may be seen as an alter ego of the founder, which could result in the assets being included in creditors’ claims as well as having estate duty consequences.

The earnings from the assets in the Trust are taxed at 40%, and interest exemptions do not apply to Trusts. Also, the inclusion rate for Capital Gains tax for an inter vivos trust is 66.6% whereas the inclusion rate for individuals is 33.3%. Lastly, as we can see from the above, a Trust is not for everyone.

It is important to weigh up the advantages and disadvantages before deciding whether to go ahead or not. The best decision would be to speak to a certified financial planner or attorney who can assist you in making the correct decision regarding your personal situation.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

Private defence of property

A1The common law provides that an owner may protect his property from harm or damage even though there might not be any physical risk of harm to the owner himself.

A person may use force in order to protect property and his or her rights therein. Private defence of property can only be resorted to if there is serious danger to the property or the owner’s rights therein. The danger must involve risk of loss, damage or destruction of the asset. The question is whether there were reasonable grounds for the defender to think that because of the offender’s unlawful conduct the danger existed.

There must be evidence that the property, movable or immovable, was in danger of unlawful damage and destruction at the moment action was taken. Unlike self-defence the danger need not necessarily have commenced or be imminent. Thus, private defence of property by means of protective devices is permitted in response to merely anticipated danger.

In order for a situation of private defence to arise, there must be evidence that:

  • action was necessary to avert danger;
  • the defence was a reasonable response;
  • the defence was directed against the attacker;
  • the attack was unlawful.

The measures taken to protect the defender’s proprietary interests must have been the only means whereby he could avoid danger. The rule regarding retreating has no application in the defence of property. One is not expected to abandon one’s property. Likewise, the inhabitants of dwellings are not expected to flee from homes, rather than resist the intrusion of a burglar.

The test is whether the means of defending the property were reasonable by having regard to all the circumstances, such as the nature and extent of the danger, the value of the property, and the time and place of the occurrence. The value of the property seems an important factor in determining the reasonableness of the defence.

In Ex parte Minister of Justice: In re S v Van Wyk the Court decided that killing in defence of property can be justified in circumstances where no other less dangerous or effective method is available to protect property.

In Ex Parte Minister of Safety and Security: In re S v Walters  2002 (CC), Judge Kriegler stated that while it was unnecessary to say whether our law allows for killing in defence of property, what is material is that the law applies a proportionality test, weighing the interest protected against the interest of the wrongdoer. These interests must now be weighed in the light of the Constitution. Judge Kriegler said that surely in Constitutional terms, the value of a life must be prized above the value of property.

The decision in Van Wyk is ripe for reconsideration by the Constitutional Court. Arguably the best route they could take is to draw a distinction between an excuse and a ground of justification. They could say that killing in defence of property is unlawful or wrongful, but in exceptional circumstances could be excusable if a reasonable person would have done the same thing.

It could therefore be argued that a deadly attack in defence of property would only be regarded as justifiable in extreme circumstances.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

SARS prescription

A2Imagine the following scenario: a taxpayer named Andrew is on his annual vacation for four weeks. On the fifth day of his vacation, he is lying carefree in the sun with his toes wiggled into the warm beach sand. A thought crosses his mind: perhaps he must check his email for a change.

Fast forward eight hours: Andrew logs in to his email. He gives the emails in his inbox a quick scan. Suddenly his stomach cramps. His heart beats faster. His hands start to sweat. His eye caught an email from SARS. Andrew opens the email and then the attachment reluctantly. The attachment contains a letter from SARS stating that they are going to re-assess his income tax for a specific tax year. The assessment for that particular tax year has been issued more than four years ago. Can SARS do this?

To be subjected to the prescription (or re-opening) of an assessment that has been finalised a few years ago already, is something taxpayers don’t even want to contemplate. However, in terms of the new Tax Administration Act, 28 of 2011 (TAA) SARS may go back more than three tax years into the past, prescribe and re-assess a tax return but only if the Commissioner is objectively, based on the facts, satisfied that both the following statutory requirements are met:

  1. There was fraud, misrepresentation or non-disclosure of material facts.

“Fraud” is defined as an unlawful act committed with the intention of misleading another person. The misleading information must cause the other person to act differently than they would have acted if they were not given the misleading information.

The legal meaning of “misrepresentation” refers to a false statement made by a person, regardless of whether the statement is made negilently, fraudulently or innocently. Misrepresentation does not include the expression of an opinion or an interpretation of law.The taxpayer must have made a positive statement which contained one or more facts that were untrue.

Note that innocence cannot be pleaded as an excuse for misrepresentation. Taxpayers thus have to make sure about the content of any statement they make regarding their tax affairs before making such a statement.

“Non-disclosure” means failure to reveal a fact if there is a duty to disclose it. Whether or not there is an intention to conceal it is irrelevant.

  1. The above fraud, misrepresentation or non-disclosure of the material facts was the direct cause that the taxpayer had been assessed for a lower amount of tax than if the taxpayer had disclosed these material facts referred to in section (i) above, to SARS.

There must be evidence of a direct link between the non-disclosure or misrepresentation of the material facts and the taxpayer paying too little tax. If the fraud, non-disclosure or misrepresentation of the material facts did not cause the taxpayer to be liable for less tax than he was assessed for without the material facts, the second requirement listed above is not met and SARS shouldn’t be able to apply this section of the TAA.

Generally the onus of proving that income is not taxable or that an expense is tax-deductable rests with the taxpayer. However, if SARS wants to apply the provisions of this section of the TAA, the onus of proving that the above requirements are met, rests with the Commissioner.

It seems that if the fraud, non-disclosure or misrepresentation of material facts did take place but did not cause the taxpayer to pay less tax than if SARS had been in possession of these material facts, and SARS would have assessed the taxpayer in exactly the same way as with the original assessment, despite SARS becoming aware of the material facts now, SARS cannot claim that the under-assessment was due to that fraud, non-disclosure or misrepresentation of the material facts.

If SARS wants to issue an additional assessment on the basis of requirement (i) above but requirement (ii) is not met, the taxpayer can deal with this situation using the objection and appeal provisions available.

In the light of SARS’s tools to go back and prescribe assessments for old tax years, it might be prudent to keep tax records for longer than the required retention periods prescribed by SARS.

Reference List:

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)