Practical Issues in the Dispute Resolution Process: Objection Phase
SARS recently changed their dispute process on e-filing to include additional functions such as allowing taxpayers to request suspension of payments online or submitting a request for remission of interest and admin penalties.
The system furthermore compiles the DISP01 on your behalf and only requires the taxpayer to select the amounts under dispute and to provide descriptions in the ‘Grounds for Dispute’ and ‘Reasons for Late Submission’ blocks where applicable.
We herewith list some issues experienced with the new system on a practical level:
Grounds for Dispute to be completed in full
Generally together with the DISP01 form the taxpayer or tax practitioner acting on behalf of the taxpayer, will submit a comprehensive Grounds for Objection letter together with the supporting documents.
As the grounds on which the objection is based are described in detail in the accompanying grounds for objection letter, taxpayers often only refer to the latter referenced letter in the ‘Grounds for Dispute’ field on the form. SARS has however indicated that the taxpayer should in short include the reason for the objection as well the grounds on which it is based and cannot only make reference to the supporting document. Where taxpayers do not comply with the request, SARS have warned that such objections may be declared invalid.
Assessment Results
When making the selection of which amounts the taxpayer is objecting to on the prescribed DISP01 form, the system collects these amounts as well as their SARS source codes from the latest assessment. This amount is referred to as the ‘Dispute Amount’ on the DISP01 form. On a practical level, the system often either does not display any values under the relevant SARS source codes, despite income disclosed under the source codes on the assessment or displays the incorrect amount.
As taxpayers are unable to change the incorrect ‘Dispute Amount’ blocks on the DISP01, the objection is to be submitted as is. Despite bringing the system error to SARS’ attention on the DISP01 form, SARS declares the dispute as invalid due to the incorrect amount displayed in the ‘Dispute Amount’ blocks and steps need to be taken for SARS to treat the objection valid.
Limitation on Number of Objecting Source Codes
The taxpayer is only allowed to object to five items per objection as the new system limits the number of SARS source codes when completing the DISP01 form. Where there are more than five items in dispute, the taxpayer should wait for the finalisation of the first objection and only thereafter submit another objection against the remaining incorrect source codes. This often results in the later objection being declared invalid as a result of being late and steps need to be taken to for SARS to treat the objection as valid.