Decisions of South Africa’s courts are an essential source of law. The courts uphold and enforce the Constitution and develop common law that is consistent with the values of the Constitution, and the spirit and purpose of the Bill of Rights. In a taxation context, court decisions assist in how legislation must be interpreted or confirm the rights and obligations of taxpayers and the South African Revenue Service alike. One, therefore, cannot appreciate the tax landscape, without having regard for the decisions of our courts.
In the case of the Commissioner for SARS vs Public Protector (23 March 2020) in the Gauteng High Court, the matter of the confidentiality of taxpayer information came up for consideration. This matter has a protracted history stemming from around November 2018. The Public Protector’s office had been actively seeking the (then) president’s tax records for an investigation, and for which the Public Protector issued a subpoena in October 2018.
The Public Protector argued that her office required the personal tax information of former President Zuma as she was investigating a complaint by a political party sourced from a column in a published book, relating to the former president’s alleged tax woes and that he had been receiving a salary from a private security company.
The substance of the Public Protector’s argument was based on the legal concept of jus causa (just cause), stating that this information was essential to her investigation. Interestingly, the former president came out in the Public Protector’s defence and attempted to file an affidavit confirming that she may access these records.
SARS’ argument to deny access to the records was based on section 67 of the Tax Administration Act, protecting the secrecy of taxpayer information. SARS’ refusal was echoed by counsel and based on the premise that the subpoena sought to coerce the production of sensitive information, and which production is a criminal offence according to the Tax Administration Act. SARS further pointed out that the Public Protector is not an “exempted authority” for purposes of providing information. SARS similarly pointed out that the Public Protector had various other avenues available to obtain this information, which was both lawful, and was never attempted (and that she had received advice to this effect).
The Court ruled in favour of SARS, confirming the sanctity of taxpayer secrecy. In his judgement, judge Mabuse confirmed that the Tax Administration Act provides that no current or former SARS employee may disclose taxpayer information to any person who is not a SARS official. The Court further looked at the phrase “just cause”, as contemplated in the Public Protector Act, and denied that this instance was a situation of just cause, warranting the issuing of a subpoena. The Court held that the Public Protector had no valid reasons for seeking the taxpayer information, that she failed to observe legislation and had the wrong impression that she had unlimited powers.
SARS’s application of withholding the information was upheld and the court order that was based on the provisions of the Tax Administration Act, as well as the “just cause” provision held in the Public Protector Act, provided that SARS was entitled to withhold this information. It was further ordered that the Public Protector’s subpoena powers do not extend to taxpayer information.
Taxpayers should take some heart from the judgement, knowing that SARS has the right, and will attempt, to keep their tax matters confidential from other parties, within the boundaries of the law.
This article is a general information sheet and should not be used or relied upon as 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 financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)