Tax Effect Of Fixing Errors

BPR268 deals with the tax implications of an arrangement that is aimed at correcting previous errors by a taxpayer. On the face of it, the transaction appears relatively simple but further consideration of the possible uncertainty that warranted requesting a ruling reveals some of the complexities of it in light of the specific requirements of the tax law. The ruling should serve as a reminder to taxpayers not to underestimate the tax complexities that even the simplest transaction may hold.

It is unavoidable where people are involved in a process that errors will occur from time to time. A recent ruling issued by the South African Revenue Service (SARS), Binding Private Ruling 268 (BPR268), highlights the importance of not assuming that the correction of an error does not have any tax implications.