Page 58 - Nexia Cape Town 2018 TG Digital

■ Reasonable care not taken means that a taxpayer is required to take the
degree of care that a reasonable, ordinary person in the circumstances of the
taxpayer would take to fulfill his or her tax obligations
■ No reasonable grounds for the tax position would occur when the taxpayer
does not have a reasonably arguable position� A taxpayer’s interpretation
of the application of the law is reasonably arguable if, having regard to the
relevant authorities, for example an income tax law, a court decision or
a general ruling, it would be concluded that what is being argued by the
taxpayer is at least as likely as not, correct
■ Impermissible avoidance arrangement means an arrangement as defined in
the General Anti-Avoidance Rules in the Income Tax Act
■ Gross negligence means doing or not doing something in a way that, in all
the circumstances, suggests or implies complete or a high level of disregard
for the consequences� Gross negligence involves recklessness but does not
require an element of wrongful intent or “guilty mind”, or intent to breach a
tax obligation
■ Intentional tax evasion is a willful act that exists when a person’s conduct is
meant to disobey or wholly disregard a known legal obligation� Knowledge of
illegality is crucial

Behaviour Standard Obstructive Voluntary Voluntary
case or repeat disclosure disclosure
case after audit before audit
notification notification
Substantial understatement 10% 20% 5% 0%
Reasonable care not taken 25% 50% 15% 0%
in completing return
No reasonable grounds for 50% 75% 25% 0%
tax position
Impermissible avoidance 75% 100% 35% 0%
arrangement
Gross negligence 100% 125% 50% 5%
Intentional tax evasion 150% 200% 75% 10%

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