‘Bona Fide Inadvertent Error’ in Section 222 of the Tax Administration Act 28 of 2011. An Analysis of Two Recent Cases: CSARS v The Thistle Trust (2023) (2) SA 120 (SCA) and Commissioner for the South Africa Revenue Service v Coronation Investment Management SA (Pty) Ltd (2023) 2 All SA 44 (SCA)

Abstract

The aim of this case note is to discuss the contentious issue relating to the interpretation of the term ‘bona fide inadvertent error’ in the context of understatement. Two recent cases—CSARS v The Thistle Trust (2023) (2) SA 120 (SCA) (7 November 2022) and CSARS v Coronation Investment Management SA (Pty) Ltd (2023) 2 AII SA 44 (SCA) (7 February 2023)—will be discussed against the backdrop of relevant case law and literature. This case note argues that the Tax Administration Act should be amended to provide greater protection to taxpayers who rely on the advice of tax practitioners when submitting returns to the South African Revenue Service (SARS). It further contends that the definitions of ‘understatement’ and ‘bona fide inadvertent error’ in SARS’s Formal Guide to Understatement Penalties (Issue 2, 18 April 2018) should be revised to reflect the broader interpretation adopted by the Supreme Court of Appeal in the Thistle Trust and Coronation judgments.