AUTHOR: GRAEME PALMER
PUBLICATION DATE: 16TH FEBRUARY 2026
Few principles in tax law are as fundamental as the taxpayer’s burden of proof. The recent Supreme Court of Appeal judgment in Lutzkie v Commissioner for the South African Revenue Service (SARS) has again placed this principle under the spotlight. The judgment is a clear reminder that when a taxpayer disputes an assessment, the onus is on the taxpayer to satisfy the court on a balance of probabilities that an assessment is incorrect.
Historically, section 82 of the Income Tax Act 58 of 1962 governed the burden of proof, and it placed the onus on the taxpayer to show that an assessed amount was not taxable. Although this was replaced by section 102 of the Tax Administration Act 28 of 2011, the essence of the burden remains unchanged.
The Lutzkie judgment is a textbook example of a taxpayer failing to discharge its onus. In Lutzkie, SARS identified a deposit of R1.67 million paid to the taxpayer and treated it as taxable income. The taxpayer advanced shifting explanations, first that the amount was a loan, then that it was repayment of a shareholder’s loan from an offshore entity. Yet crucially, he never testified at the trial and relied instead on hearsay evidence from his auditor, who in turn relied on emails and assumptions. The Tax Court explicitly refused to admit hearsay evidence, and Lutzkie provided no direct, admissible evidence to substantiate his version.
The Court held that in such circumstances, the taxpayer fell hopelessly short of discharging the onus of proof. The SCA reaffirmed that affirmative evidence is required, that is evidence which on a balance of probabilities, demonstrates the assessment is wrong. Without it, the taxpayer simply cannot succeed.
A recurring theme in tax disputes is inadequate record‑keeping. Proper records are not a luxury; they are a legal necessity for meeting the burden of proof.
Taxpayers often believe that supplying a handful of documents is enough. It rarely is. Context, explanation, and supporting detail are essential to discharging their onus of proof.
Modern tax administration is becoming more technologically intensive. SARS increasingly relies on third‑party reporting and artificial intelligence to detect discrepancies. While efficient, this can amplify the taxpayer’s burden when errors creep into third‑party data. Inaccuracies in employer reports or bank feeds may force taxpayers into the difficult position of disproving data they did not generate and cannot easily verify. This does not shift the legal burden, taxpayers must still prove SARS’s assessment is wrong, but it does make the evidentiary exercise more challenging.
There are limited instances where SARS carries the burden of proof, such as when imposing understatement penalties. Here SARS must prove the existence of an understatement, taxpayer behaviour, and prejudice to the fiscus. The other instance where SARS has the burden of proof is proving that an estimate under section 95 is reasonable. But outside of these exceptions, the taxpayer bears the burden.
The core lesson from Lutzkie is simple: the taxpayer must be prepared to prove their tax position with clear, credible, admissible evidence. Unsupported assertions, hearsay emails, and shifting explanations will not suffice. In tax disputes, the burden of proof is not just a legal concept, it is the difference between winning and losing.
Tel: +27 31 570 5496
email: grame.palmer@gb.co.za