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Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 5.5.6 –

Posted in sections, this is my Doctoral Thesis on taxpayers rights when audited by the tax authorities in South Africa – equally applicable to many English-based law systems in Africa and abroad (eg. India). This will be of particular use to any tax practitioners doing work in Africa and in other English-based legal systems around the world.

Analysis of Challenging The Commissioner’s Discretionary Powers In Auditing Taxpayers under The Constitution of The Republic of South Africa


The first principle of administrative law (and of the rule of law) is that the exercise of power must be authorised by law. SARS does not have inherent powers99 to exercise public power: its power to act must be derived from a lawful empowering source100such as in the form of ss 74A and 74B. Any discretion performed by SARS without any lawful authority or empowering provision is illegal, contrary to the rule of law (including the principle of legality) and ultra vires.101 This is also the case if SARS does not comply in full with the jurisdictional requirements of an empowering provision. An act performed by SARS, where it cannot produce an ‘authorisation letter’ as contemplated in s 74 of the Income Tax Act, or where the ‘authorisation letter’ does not specifically authorise the official to conduct an inquiry and audit under ss 74A and 74B in respect of a specific and named taxpayer, would be beyond its powers.

Section 6(2)(a)(i) of PAJA allows the judicial review of administrative action by SARS when it ‘was not authorised to do so by the empowering provision’. The mere exercising of a power which has not been conferred upon SARS in accordance with an ‘authorisation letter’ would be in contravention of the lawfulness requirement of administrative law, and the principle of legality, and, as such, reviewable. The taxpayer would call upon SARS to show why its decision should not be set aside for lacking the appropriate authority. The application would rely on s 6(2)(a)(i) of PAJA, and failing that, in the alternative as contrary to the principle of legality in that SARS’ conduct is unlawful and thus unconstitutional.

Next Jurisdictional facts



99 Section 41(1) of the Constitution; Hoexter (2012) at page 255; 100 Beinart B Administrative Law (1948) 11 THRHR 204 at page 215; Fedsure Life Assurance Limited v Greater Johannesburg Transitional Metropolitan Council 1999(1) SA 374 (CC) at para [58]. 101 Hoexter (2012) at page 114 footnote 33; See section 3.3: Lawfulness supra.


International Tax Attorney, EA, US Tax Court Practitioner in the USA, Counsel of the High Court in South Africa, adjunct Professor of International Tax at Thomas Jefferson School of Law.

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