South Africa: Confidentiality Provisions Under The Tax Administration Act

This article considers the scope of the new confidentiality provisions contained in the Tax Administration Act 28 of 2011 (“Admin Act”) and how such provisions differ from the “Preservation of Secrecy” provisions previously contained in section 4 of the Income Tax Act 58 of 1962 ("the Act").

Chapter 6 of the Admin Act

Chapter 6 of the Admin Act (“Confidentiality of Information”) replaces the secrecy provisions previously set out in section 4 of the Act, which have now been repealed (section 26 of Schedule 1 to the Admin Act).

In terms of Chapter 6 of the Admin Act, a distinction is now drawn between “SARS confidential information” and “taxpayer information”. Such distinction was not contained in the previous secrecy provisions set out in section 4 of the Act.

It is important to determine which category of confidential information relevant information falls into (i.e. “SARS confidential information” or “taxpayer information”), as different obligations fall on different persons in relation to maintaining the confidentiality of such information, according to its classification.

SARS confidential information

The term “SARS confidential information” is defined in detail in section 68(1) of the Admin Act and includes items such as information subject to legal professional privilege vested in SARS and information supplied in confidence by a third party to SARS the disclosure of which could reasonably be expected to prejudice the future supply of similar information, or information from the same source.

In terms of the SARS Short Guide to the Admin Act, “SARS confidential information” is:

Based on the above extract from the SARS Guide, it appears that the legislature did not intend the term “SARS confidential information” to have wide application.

In terms of section 68(2)(a) and (b) of the Admin Act, a person who is a current or former SARS official, may not disclose “SARS confidential information” to:

• a person who is not a SARS official; or

• a SARS official who is not authorised to have access to the information.

Section 68(2)(c) of the Admin Act also provides that the current or former SARS official must take the precautions that may be required by the Commissioner to prevent a person referred to above from obtaining access to the information.

However, in terms of section 68(3) of the Admin Act, a person who is a SARS official or former SARS official may disclose “SARS confidential information” if:

• the information is public information;

•  authorised by the Commissioner;

• disclosure is authorised under any other Act which expressly provides for the disclosure of  the information despite the provisions in Chapter 6 of the Admin Act;

• access has been granted for the disclosure of the information in terms of the  Promotion of  Access to Information Act; or

• required by order of a High Court.

Although section 68 of the Admin Act only imposes an obligation on a SARS official not to reveal “SARS confidential information”, section 67(3) of the Admin Act states that in the event of the disclosure of, inter alia, “SARS confidential information” contrary to Chapter 6 of the Admin Act, the person to whom the information was disclosed may not in any manner disclose, publish or make it known to any other person who is not a SARS official.

Therefore, if a person receives correspondence from SARS which constitutes “SARS confidential information” that has been disclosed contrary to Chapter 6 of the Admin Act, such taxpayer is prohibited in terms of section 68(3) of the Admin Act from disclosing such information to another person who is not a SARS official authorised to have access to that information.

In terms of section 70 of the Admin Act, SARS may make disclosure to the specified entities listed in that section where necessary. For example, a senior SARS official may disclose to a commission of inquiry established the President of South Africa under a law of South Africa the information to which the commission is authorised by law to have access.

Taxpayer information

The term “taxpayer information” is defined in section 68(1)(b) of the Admin Act as:

In terms of the SARS Short Guide to the Admin Act, the term “taxpayer information”:

It therefore appears that, in contrast to the definition of “SARS confidential information”, the legislature intended the term “taxpayer information” to have a very wide application

Section 69(1) of the Admin Act stipulates that a SARS official (current or former) must preserve the secrecy of “taxpayer information” and may not disclose “taxpayer information” to a person who is not a SARS official, subject to the exceptions set out in section 69(2) of the Admin Act.

Specifically, section 69(2)(d) of the Admin Act provides that section 69(1) does not prevent the disclosure of “taxpayer information” by a person who is a SARS official, if the information is public information.

In addition, section 69(6) provides that section 69(1) does not prohibit the disclosure of information either to the taxpayer or to another person with the written consent of the taxpayer. This provision is stricter than its counter-part previously contained in section 4(2B) of the Act, which did not require that the taxpayer’s consent be reduced to writing.

Commencement date

In terms of Government Gazette Notice No. 51 contained in Government Gazette No. 35687 dated 14 September 2012, the Admin Act commences on 1 October 2012 save for certain provisions.

None of the excluded provisions fall within Chapter 6 of the Admin Act.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.