A critical legal analysis of aspects of Section 73 of the Value Added Tax Act 89 0f 1991

Abstract : Section 73 of the Value Added Tax Act 89 of 1991 and section 80 A-L of the Income Tax Act 58 of 1962 are anti-avoidance provisions dealing with the liability of taxpayers who enter into or carry out schemes with the aim to obtain undue tax benefits and to avoid, postpone or reduce amounts due for taxation respectively. Although the aforementioned sections are similar, section 73 is of a wider ambit and noteworthy of examination and discussion in that section 73 purports to apply to all schemes entered into before or after the commencement of the VAT Act while section 80 A-L applies only to schemes entered into on or after 2 November 2006. Section 73 places the ascertaining of when an undue tax benefit has been obtained to the discretion of the Commissioner of the South African Revenue Service. The duty to determine the penalty for liability is also placed in the prudence of the aforementioned Commissioner. Judicial precedence has been handed down in an undertaking to hold taxpayers who act unduly liable and to ascertain the correctness of the exercise of power by the South African Revenue Service. This has led to debate in that area of law and has extended to the question of whether the provisions of the above mentioned sections afford the South African Revenue Service unjustifiable authority. The purpose of this research is to, (i) ascertain the level of compliance required from taxpayers through the burden of proof placed on them under section 73; (ii) to enquire into the authority which is afforded to the Commissioner of the South African Revenue Service; and (iii) to establish whether such authority is excessive and whether it is irregular to such an extent that it is to the unequitable detriment of the taxpayer.LL.M. (Banking Law