2193. Criminal offences

APRIL 2013 – ISSUE 163


The Tax Administration Act No. 28 of 2011 (TAA) came into effect on 1 October 2012. The TAA makes provision for various criminal offences apart from the imposition of administrative non-compliance penalties and understatement penalties. These provisions are contained in Chapter 17 (section 234 to section 237) of the TAA.

Some of the most pertinent criminal offences relating to taxpayers in respect of administrative issues are where the taxpayer 'wilfully and without just cause' fails or neglects to:

In respect of other administrative interactions with SARS, it is a criminal offence not to:

Under common law, fraud is defined as the intentional making of an unlawful misrepresentation that actually causes or potentially can cause another person to act to his or her detriment. Most cases of tax fraud would probably fall within the scope of this definition, however, the TAA provides specifically for certain fraud-like acts to constitute statutory crimes. These include the wilful submission of a false certificate or statement in respect of returns or financial statements or accounts. It also includes the wilful issue of an erroneous, incomplete or false document that is required to be issued under a tax Act (such as a VAT invoice).

The crimes mentioned thus far carry a penalty of a fine or maximum imprisonment of two years.

Staying in the realm of fraud, Chapter 17 also contains section 235, which specifically deals with tax evasion and obtaining undue refunds. The section is virtually the same as its predecessor, section 104 of the Income Tax Act No. 58 of 1962 (the Act). Section 235 of the TAA provides that it is a criminal offence for a person, with the intent to evade tax or assist another person to evade tax or obtain an undue refund, to:

The penalty in respect of such a crime is a fine or imprisonment of up to five years. Section 235(2) of the TAA contains a so-called 'reverse onus' (the same as section 104(2) of the Act). It essentially provides that where a person is accused of making a false statement (as discussed above), that person will be regarded as guilty unless that person can prove that there is a reasonable possibility that he or she was ignorant of the falseness of the statement and that the ignorance was not due to negligence on his or her part.

This provision stands in direct contrast to section 35(3)(h) of the Constitution, which specifically guarantees an accused person to be presumed innocent as part of his or her right to a fair trial.

It is alarming to note that SARS has decided to retain the reverse onus provision in the context of our Constitutional dispensation. This provision is sure not to go unchallenged in court.

Cliffe Dekker Hofmeyr
ITA: Section 104(2)
TAA: Sections 234 – 237
Constitution of the Republic of South Africa: Section 35(3)(h)