Taxpayers can now get a binding tax ruling in advance of proposed transactions. This could be useful for complex deals where the tax implications may be unclear.

There has always been an option to get a free ruling, but the key difference here is that the ruling is binding on SARS - at least for the person making (and paying for) the application.
2 October 2006, Pretoria - By proclamation dated 23 September 2006, President Thabo Mbeki has set 2 October 2006 as the date on which the enabling legislation for the new Advance Tax Ruling System is taking effect.

The System represents a major new service for taxpayers and is intended to promote clarity, consistency and certainty in the interpretation and application of the tax laws and, by doing so, help taxpayers to comply with the tax laws.

The System authorises the Commissioner to issue two new types of rulings: binding private rulings and binding general rulings.

Under this system, taxpayers may formally request a ruling from the Commissioner in connection with the interpretation and application of the tax laws to a specific proposed transaction, subject to certain limitations.

Provided that there is full disclosure of all material facts, the ruling will generally be binding on the Commissioner when an assessment is made in connection with that transaction.

The Commissioner will also publish all binding private rulings in an edited form to protect confidentiality. This is being done to provide information and guidance to taxpayers generally and to ensure that all taxpayers operate on a level playing field. The binding effect only applies, however, to the applicant who requested the ruling. The binding private rulings may not be cited as precedent by any other taxpayer.

The Commissioner will begin to accept applications for binding private rulings on 16 October 2006.

All applications must be submitted electronically through the ATR Service Portal on the SARS eFiling site ( Applications may not be submitted manually.

Applications are subject to both an application fee and a cost recovery fee. The application fee for SMMEs is currently R2 500. The application fee for all other taxpayers is currently R10 000. The cost recovery fee will generally depend upon the complexity of the proposed transaction in question and the issues raised in the application.

In addition, the Commissioner will continue the practice of issuing nonbinding written opinions in response to taxpayer queries in connection with current or proposed transactions. These nonbinding private opinions will continue to be free of charge. They may be requested at a taxpayer’s branch office.

Binding general rulings are written statements issued by the Commissioner, in his (or her) discretion, in respect of the application or interpretation of a provision of the tax law in respect of issues or matters of general interest or importance.

These rulings are generally binding upon the Commissioner when interpreting or applying the law to a taxpayer, provided that the taxpayer’s facts and circumstances are the same as those set forth in the ruling and any applicable conditions or limitations in the ruling are satisfied.

SARS will be conducting workshops and training sessions with practitioners and taxpayer organisations over the next two weeks to help familiarise people with the new system.

Additional information may be sourced at
I think we should keep an eye out on where these rulings are published. There could be some interesting scenarios come up.