‘Cloak of confidentiality’ over tax returns can be lifted when there is a ‘public interest override’, ConCourt rules

30 May 2023

The Constitutional Court has found that tax records can be disclosed if they reveal evidence of breaking the law, risk to public safety or environmental risk, or if the public interest outweighs the harm to the taxpayer.

The Constitutional Court has opened the door for journalists, anti-corruption NGOs, individuals and even political parties to request to see the tax returns of others if they are able to prove that their release would be in the public interest. The ruling has done away with a decadeslong outright ban on the release of tax records to third parties.

The ban resulted in a request by the Financial Mail and amaBhungane Centre for Investigative Journalism to see former president Jacob Zuma’s tax records being denied by the SA Revenue Service (SARS). The organisations approached the high court and later the Constitutional Court to have sections 35 and 36 of the Promotion of Access to Information Act (Paia) and sections 67 and 69 of the Tax Administration Act declared invalid for banning any third party from accessing tax records, even in the public interest.

In making its ruling, the Constitutional Court ordered SARS to re-adjudicate its initial decision on Zuma’s tax records.

SARS commissioner Edward Kieswetter said: “We respect the findings of the Court, and are applying our mind to exact implications for SARS and taxpayers. I wish to assure all taxpayers that any request made under Paia for the tax records of a taxpayer will be judiciously scrutinised within the parameters set by the Constitutional Court. We must guard any frivolous abuse of the provisions set out by the Constitutional Court.”

Public interest

The judgment, penned by Justice Jody Kollapen and agreed to by justices Steven Majiedt, Rammaka Mothapo, Owen Rogers and acting Justice Selby Baqwa, said the case raises “whether it is constitutionally permissible for it to never disclose” tax records in the public interest. The judges found that there was a need to balance competing rights.

“Modern democracies are in many respects characterised by the challenge of competing interests, especially in diverse societies — such as ours. In this diversity, it is not uncommon for communal interests of privacy and individual self-determinations to stand in conflict with the collective public interest and the values of openness and transparency.

“When those interests and rights come into conflict, there is no magical hierarchy that one can resort to in order to resolve conflict. The conflict is invariably approached through the lens of the Bill of Rights by balancing those rights and interests in the manner contemplated by the limitation exercise in section 36 of the Constitution,” Judge Kollapen said.

Previous Constitutional Court cases have laid out the framework in which to examine this balance and Kollapen said: “The role of independent media as an important source of information and education and in advancing the idea of an open society has also been properly acknowledged” previously by the court. In one such case, the court recognised “freedom of expression as the lifeblood of a genuine constitutional democracy that keeps it fairly vibrant, stable and peaceful”.

No cloak of confidentiality

The judges noted that the Promotion of Access of Information Act, the main legislation that gives life to the Constitution’s provision of access to information, contains several mandatory protections. These include the protection of personal information of individuals and the protection of trade secrets.

Chapter 4 of Paia also protests information that could endanger the lives and safety of individuals or jeopardise the security of buildings and infrastructure or people in witness protection. In addition, it protects military and security secrets, legally privileged information and trade secrets of the state “which might jeopardise the country’s economic interest or put public bodies at a disadvantage".

“All these categories of information enjoy a general claim to confidentiality as they relate to personal and/or private matters of individuals and matters relating to the security and well-being of the country. Paia provides that an information officer receiving a request for records containing this information is obliged in some instances and permitted in others to refuse such a request," Kollapen noted.

The law also provides for a mandatory “public interest override” that “obliges the disclosure of information that would otherwise have been subject to protection”.

Justice Kollapen said that the “cloak of confidentiality” is not removed without just cause or due process. Section 46 of Paia “sets a relatively high bar for lifting of confidentiality” in which the requester has “formidable substantive and procedural hurdles to overcome.

“An information officer must be satisfied that the record sought reveals evidence of a substantial contravention of the law or an imminent or serious public safety or environmental risk. This in itself is a high threshold to meet and, at least objectively, represents aims that are closely aligned with the public interest,” he said.

He added that it was important not to “elevate taxpayer confidentially to some sacrosanct place where no exception to enable public access to it is possible … It is difficult to conceive any reasonable basis to hold that taxpayer information cannot be subjected to the ‘public interest override’ in circumstances where the override is potentially available to justify the disclosure of information that may relate to the life and the safety of the individual, the defence of the security interest of the country or the private information of a third party (including their medical records), all of which can happen in terms of section 46.”

‘A drastic measure’

A minority judgment of the ConCcourt found differently, saying the limitations in the current law were “aimed at preserving taxpayer privacy, tax compliance and compliance with international law obligations".

“If access to tax records is granted to the public, it would constitute a manifest breach of these objectives,” Justice Nonkosi Mhlantla wrote.

She added that while the court respected media freedom, the request to see Zuma’s tax records “is a drastic measure that may have grave consequences to a taxpayer".

“A major concern is the ambit of the ‘public interest override’. While the facts that underlie this application relate to a public figure, section 46 of Paia does not make the status of a public figure a precondition of the applicability test.

“By necessary implications, if the ‘public interest override’ were to be extended as proposed, the provision would be indiscriminately applicable to ordinary citizens or private individuals where their tax records could potentially prove ‘a substantial contravention of, or failure to comply with the law’ or ‘an imminent and serious public safety or environmental risk and where their disclosure would potentially be in the public interest',” Justice Mhlantla said.

She added that the tax administrator would have to make “judgment calls” relating to whether the requester had satisfied the requirements of a public interest override.

Justice Mhlantla said she did not believe the case had been made out to lift the limitation. Justices Mbuyiseli Madlanga and Zukisa Tshiqi agreed with her view in the minority judgment.

Remedies

The court ordered Parliament to amend sections 35 and 36 of Paia and sections 67 and 69 of the Tax Administration Act to ensure they are in line with section 32 of the Constitution, which promotes access to information, and to allow for mandatory public interest disclosure where the request meets the legal provisions of section 46 of Paia.

Meanwhile, the amaBhungane Centre for Investigative Journalism, which was an applicant in the case along with Arena Holdings and the Financial Mail, said they were “certainly happy with the judgment".

“This is a victory for transparency and accountability. We have seen in some of our investigations that often criminal and financial irregularities are hidden through these provisions,” said amaBhungane advocacy coordinator Caroline James.

She added that the court had made it clear that “Paia has very clear safeguards” that would apply in relation to tax records.

“I think it is very clear that SARS won’t just be releasing information that is interesting. There is a clear distinction between what is in the public interest and what is simply interesting to the public,” she said. DM

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South Africa

Public interest

No cloak of confidentiality

‘A drastic measure’

Remedies