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Tax Administration Act, 2011 (Act No. 28 of 2011)

Chapter 16 : Understatement Penalty

Part A : Imposition of understatement penalty

221. Definitions

 

In this Chapter, unless the context indicates otherwise, the following terms, if in single quotation marks, have the following meanings:

 

"impermissible avoidance arrangement"

means an arrangement in respect of which Part IIA of Chapter III of the Income Tax Act is applied and includes, for purposes of this Chapter, any transaction, operation, scheme or agreement in respect of which section 73 of the Value-Added Tax Act or any other general anti-avoidance provision under a tax Act is applied;

[Definition inserted by section 61(a) of Act No. 16 of 2016]

 

"repeat case"

means a second or further case of any of the behaviours listed under items (i) to (vi) of the understatement penalty percentage table reflected in section 223 within five years of the previous case;

[Definition amended by section 61(b) of Act No. 16 of 2016]

 

"substantial understatement"

means a case where the prejudice to SARS or the fiscus exceeds the greater of five per cent of the amount of "tax" properly chargeable or refundable under a tax Act for the relevant tax period, or R1 000 000;

 

"tax"

means tax as defined in section 1, excluding a penalty and interest;

 

"tax position"

means an assumption underlying one or more aspects of a tax return, including whether or not—

(a) qualifies as a reduction of tax payable; and
(b) an amount, transaction, event or item is taxable;
(c) an amount or item is deductible or may be set-off;
(d) a lower rate of tax than the maximum applicable to that class of taxpayer, transaction, event or item applies; or
(e) an amount

 

"understatement"

means any prejudice to SARS or the fiscus as a result of—

(a) failure to submit a return required under a tax Act or by the Commissioner;
(b) an omission from a return;
(c) an incorrect statement in a return;
(d) if no return is required, the failure to pay the correct amount of "tax"; or
(e) an 'impermissible avoidance arrangement'.

[Definition substituted by section 22 of Notice No. 16, GG 42169, dated 17 January 2019 (Tax Administration Laws Amendment Act, 2018 (Act No. 22 of 2018))]