COMPREHENSIVE GUIDE TO ADVANCE TAX RULINGS
1. Introduction
This guide provides information on the binding ruling application process and procedures
(ATR system), its purpose and on which tax matters binding rulings may not be issued.
1.1 Purpose, benefits and other considerations
The purpose of the ATR system is to promote clarity, consistency and certainty regarding the interpretation or application of a tax Act. A binding ruling application can only be accepted if the proposed transaction to which the interpretation is to apply will be concluded in the future. There is no exception to this rule.
A binding ruling is intended to provide clarity and certainty on how SARS interprets and applies the various tax laws to a proposed transaction. The ruling will be binding upon SARS when you are assessed in connection with that proposed transaction, unless you have not disclosed all the facts in connection with your proposed transaction or have not concluded the transaction as described in your application. The scope and limitations of this binding effect are detailed in 5.
The application procedures are prescriptive and structured. They are not designed to provide answers to taxpayers’ general tax queries regarding their current tax affairs or general questions about tax laws such as administrative or procedural matters (where, when or how to file returns).
The application process can be relatively lengthy, so you will have to submit your application timeously.
Before applying for a binding ruling, please consider the following questions:
 Is the answer to your question not clearly stated in existing information sources?
 Is the issue uncertain or complex in nature?
 Does the issue involve a significant amount of tax?
 Is it necessary to have formal legal certainty in the form of a binding ruling?
 Will you be able to meet the costs of obtaining a binding ruling?
 Have you allowed enough time for the binding ruling to be issued before the
commencement date of your proposed transaction?
The time period required to issue a binding ruling is normally a minimum of 20 business days.1 You should also allow time for possible delays during the application process, for example, if further particulars are required in addition to the information you provided.
If you decide to apply for a binding ruling it is recommended that you seek the assistance of an accountant, lawyer or other tax professional.
A binding ruling may only be issued by the Legal and Policy Division: Advance Tax Rulings Unit at the SARS Head Office. All applications for binding rulings must be filed online on www.sarsefiling.co.za. The eFiling system can also be accessed via the SARS website www.sars.gov.za.
See Annexure F for a summary of the various applications, the period within which to apply and the cost involved.
1.2 A brief overview
1.2.1 Definitions
Unless the context indicates otherwise, words are assigned the meanings ascribed to them in section 75 of the TA Act. In addition, the following terms have the following meanings: ‘Advance payment’ refers to an amount calculated as a percentage (normally 20%) of the highest estimated cost recovery fee that is payable in advance. This advance payment must be received by SARS before the substantive review of your application can begin.
‘Advance tax ruling’ refers to a ‘binding private ruling’ or a ‘binding class ruling’ issued by the ATR Unit of the Legal and Policy Division: Interpretation and Rulings under Chapter 7 of the TA Act (also see the definition of ‘ruling’ on the next page).
‘Anti-avoidance rule’ refers to any general or specific anti-avoidance provision of the tax laws, including sections 80A and 103 of the Income Tax Act and section 73 of the VAT Act, as well as any judicial anti-avoidance doctrine, principle or mechanism.
‘Application fee’ means a fee payable over and above the cost recovery fee.
The application fee is payable when an applicant files an application and this fee is generally non-refundable. The application fee is R2 500 for an ‘SMME’, as defined in the Government Gazette. This includes eight hours reviewing free of charge. All other applicants will pay a R14 000 application fee for either a BCR or a BPR application.
‘Application forms’ are the forms that must be completed and submitted online through the eFiling system in order to file an application. The forms consist of –
 an e-Application that includes a pre-screening checklist, contact details and basic
information about the issues raised as well as a statement of standard terms and
conditions; and
 the binding ruling application that must be uploaded.
An example of a binding ruling application is attached as Annexure E. The eFiling system limits the size of files to be uploaded to 10MB. Should the file exceed 10MB in size, please contact [email protected] for a directive. (Refer to section 79 and 1.2.2 under Supporting information and other required submissions.)
‘Business days’ are business days calculated from the date of the completed application which includes submission of all information as stipulated in section 79. Business days exclude days during which SARS has to wait for information or feedback from the applicant.
Completion times are estimates and may vary depending upon various factors, including the potential revenue implications raised by the application and the potential impact of the ruling on other taxpayers. If it appears that these times may be exceeded, the applicant will be notified in advance. The days from 16 December to 15 January (both dates included) must be added to the estimated time to complete a ruling application. This ‘freeze period’ applies to all applications that are in progress during that period.

‘Cost recovery fee’ refers to the fee prescribed by SARS for the issuance of a BCR or a BPR. The fee excludes an application fee that is payable over and above the cost recovery fee.
‘Estimated cost recovery fee’ refers to an estimate of the cost recovery fee which is
published online.
‘Extension’ refers to an extension of the validity period of a binding ruling issued previously by the ATR Unit regarding a once-off transaction which has not occurred during the validity period.
‘Issues raised’ refers to the specific questions asked in the application about the tax
implications regarding the proposed transaction.
‘Late application’2 refers to any application that is submitted on eFiling less than 20
business days before –
 the date of the proposed transaction; or
 any other date or deadline requested or specified in respect of the application,
whichever is earlier.
‘Filed’: An application is considered filed when the applicant has –
 accepted the estimated cost recovery fee made available on eFiling;
 signed and returned the Letter of Engagement made available on eFiling; and
 made the advance payment.
‘Notice of acceptance’ refers to an automated notice issued by the ATR Unit to the
applicant informing the applicant that the application has been accepted or rejected. If the application was accepted, this notice will indicate that the estimation of the cost recovery fee was published on eFiling.
A ‘reconfirmation’ is a re-application for a prior binding ruling issued by the ATR Unit, the validity period of which has expired. Provided the facts remain the same, the applicant may request that the ruling should be reconfirmed for a further period. Reconfirmations are applications for binding rulings and all terms and conditions applicable to applications are applicable to reconfirmations which include application fees.
A ‘ruling’ refers to a letter in the form of a complete written statement that SARS issues through the ATR Unit of the Legal and Policy Division: Interpretation and Rulings. It sets forth SARS’s interpretation of the relevant tax laws and how they would apply to the proposed transaction it describes.
2 An application may not be accepted unless sufficient time is available for the issuing of a binding ruling before the transaction date.

Generally, a ruling (in the case of a BCR or a BPR) includes –
 a statement identifying it as a BCR or BPR made under section 78;
 the name, tax number and postal address of the applicant;
 a list or a description of the affected class members in the case of a BCR;
 the relevant statutory provisions and legal issues;
 a description of the proposed transaction;
 the specific ruling made;
 any assumptions made or conditions prescribed by SARS in connection with the
validity of the ruling; and
 the period for which the ruling is valid.
An ‘SMME’ for purposes of the reduced fee is defined as –
(a) any person, excluding a listed company, if the gross income for the most recent year of assessment did not exceed the amount prescribed in the definition of a ‘small business corporation’ under section 12E(4)(a)(i) of the Income Tax Act; and
(b) in respect of applications for VAT rulings only, any partnership, where the gross
income for the most recent year of assessment did not exceed the amount prescribed in the definition of a ‘small business corporation’.
1.2.2 The ATR process in a nutshell
Generally, the ATR process involves a number of steps, beginning with the submission of an application and ending with a ruling issued by the ATR Unit and its publication by SARS in edited form.
These steps are summarised below:
 Filing the application form. The ATR process begins with the filing of the
application forms and the payment of the application fee. The application forms must be submitted electronically and the payment of the application fee must also be made through the SARS eFiling system. An e-Application that is filed without payment of the application fee will expire in 10 days. If there is any uncertainty as to whether a rejection may apply, applicants are welcome to lodge the online application and upload the application documentation for evaluation before payment of the application fee.
 Pre-screening checklist. The first form that must be completed is the pre-screening checklist which helps to ensure that your application is eligible for the ATR process and that it is not subject to a rejection.
 Contact details and other basic information. The remaining application forms
permit SARS to obtain contact information about you and your authorised
representative, if any. It also enables SARS to identify the general areas of the tax
laws at issue in order to expedite the assignment of your application to a specialist
and the processing of your application.

 Confirmation and reference number. Once you have successfully submitted the
pre-screening checklist as well as the application forms, you will receive an electronic confirmation. Your confirmation will also include a reference number to be used in your further communication with SARS with regard to the application.
 Supporting information and other required items. In terms of section 79, you
must also provide detailed supporting information and other required items in
connection with your application. You must submit this information within five
business days of the date of the electronic confirmation unless an extension is
granted in writing.
 Review of application. Once the supporting information and other required items
have been received, the application will be assigned to a specialist. The specialist will review your application more comprehensively to ensure that none of the rejection criteria apply.
 Notice of acceptance. Upon completion of this review, the specialist will notify you within five business days of completion of the submission requirements whether or not your application has been accepted. If the application was accepted, this notice will indicate that the estimation of the cost recovery fee was published.
 Estimated cost recovery fee. The specialist will provide you with an online estimate of the cost recovery fee. Work in connection with your application cannot begin until you have read and accepted the Letter of Engagement as well as electronically accepted the estimated cost recovery fee and made the advance payment that was calculated as a percentage of the highest estimated cost recovery fee (normally 20%).
 Letter of Engagement. Upon acceptance of the estimated cost recovery fee, you
must indicate that you have read and accepted the Letter of Engagement by ticking
the relevant box. The engagement letter is a binding contract between you and
SARS that sets forth the basic terms and conditions that govern the rulings process,
including your acceptance of the estimated fee and agreement to make the advance and final payments.
 Substantive review. Once these requirements have been satisfied, the specialist will proceed with the substantive review of your application. During this process, the specialist may request additional information from you in connection with your
application. A breakdown of the review is provided in Annexure D. A ruling application may still be rejected during the review process if it becomes apparent that an exclusion or rejection criterion is applicable.
 Meeting with the specialist. During the review process, you or the specialist may
request a meeting to discuss and clarify the issues raised or the proposed transaction itself.. Note that meetings will not be held before the documentation has been uploaded, or a draft application has been provided, and no indication of
whether the ruling will be positive or negative will be given.
 Status checks. You will be able to check the status of your application on the eFiling system throughout the review process or you can email [email protected].

 Notice of proposed ruling. Upon completion of the review process, you will be
notified online of SARS’s proposed ruling in response to the issues raised in your
application. The proposed ruling may be positive or negative.
 Proposed positive ruling. If the ruling is positive, you will be provided with a
draft of the proposed ruling. You must review the draft ruling carefully for accuracy and inform SARS of any errors or omissions you believe may have been made.
 Proposed negative ruling. If SARS intends to issue a negative ruling, you will be notified and given an opportunity to discuss the matter with the specialist. If a final decision is taken to issue a negative ruling, you will be given the option to –
1. request that the ruling not be issued and to withdraw the application online after filing a notice to discontinue; or
2. in certain limited cases, to amend the application to address those aspects of the proposed transaction that have given rise to the problem.
In either event you will remain liable for the work done on your application.
In particular, any application fees paid will not be refunded and any outstanding costs incurred up to the date that the notice to discontinue is filed, must be paid.
Both cases may necessitate a revision of the original estimated cost recovery fee
published. The specialist will inform you if necessary.
 Issuance of the ruling. Once all of the foregoing steps have been completed, the
ruling will be issued to you online and upon your request, sent to the address shown on your application. The request must be received no later than the date upon which you approved the final ruling.
 Validity period of the ruling. The ruling will be valid for a specific period.
A reconfirmation can be requested, provided the facts have remained the same. It is in most cases unnecessary to request an extension even if the period over which the ruling is applied exceeds the validity period. For example, if a ruling has been
requested on section 12D of the Income Tax Act and the write down of the value of
the asset is limited to 5% per year, the ruling may be valid for five years, but the cost will be written off over 20 years. SARS will not change the write down period after the ruling has expired unless circumstances would justify a withdrawal of the ruling.
In that event SARS will communicate the circumstances and its conclusions to the
applicant as if the ruling were in force.
 Publication of the ruling in edited form. If an ATR is issued to you, the final step
involves the publication of the ruling in edited form (published ruling). You will also be provided with a draft copy of the edited ruling online for review and comment.
You must review this draft carefully and notify SARS if you believe it contains any
inaccuracies or other confidential information that should be deleted. SARS must
consider, before publication, any comments and proposed edits and deletions
submitted by you. In the event of a dispute, SARS’s determination in respect of the
content of the published ruling is final.

The following steps must be taken if you are applying for a reconfirmation:
 Access the SARS eFiling system and apply online again following the normal
application process.
 Pay the applicable application fee.
 Within five business days, submit a reconfirmation request together with a motivation as to the reason why the reconfirmation should be granted. This motivation must address both the question whether or not the background circumstances have changed and the reason why in this instance an extension is in fact necessary from the applicant’s perspective.