TAXATION
“TIPS FOR PRAVIN”
Finance Minister, Pravin Gordhan is continuing the campaign introduced by his predecessor, the current Planning Minister, Trevor Manual. Gordhan invites South Africans to send him their tips on what they would like to see in the next National Budget and what the Government’s spending priorities should be. The budget is due to be tabled in the National Assembly on 23 February 2011 and the campaign is aimed at ensuring active participation in programmes related to the economy the ministry announced.
NO PLACE TO HIDE!
It is claimed that more than 200 000 taxpayers have outstanding income tax returns, some spanning multiple years. The Income Tax Act of 1962 provides for a system allowing the South African Revenue Service (SARS) to impose administrative penalties for a range of non-compliance, such as failure to register as a taxpayer, failure to inform SARS of a change of address as well as a failure to submit income tax returns and other documents. The administrative penalties range from R250 per month to R16 000 per month, per income tax return, depending on the taxpayer’s taxable income and came into effect on 1 January 2009. In accordance with Section 99 of the Act, SARS may appoint employers and banks to act as agents to collect monies owed by taxpayers. Expert legal opinion has it that the section is constitutional and does not require a hearing before its application.
SARS will normally communicate with affected employers when a part of a person’s remuneration will be deducted for payment to SARS. This effectively makes employers tax collectors. Banks are not required to inform their clients when paying money over to SARS. Tax payers do not have an opportunity to contest the payment demanded by SARS. In the event of the agent failing to pay over the amounts to SARS, they can be held liable to the extent that they hold money on behalf of the taxpayer.
The bottom line is that SARS will get its money and there is no place to hide!
SEARCH AND SEIZURE POWERS OF SARS EXTENDED
A proposal to extend the powers of SARS is contained in the second draft of the Tax Administration Bill released recently. SARS will be able to search for and seize documents when a senior SARS official has reasonable grounds to believe that relevant material will be destroyed or removed. The proposal is based on the findings of the Constitutional Court that there are times when searches without warrants and the seizure of documents are justified and constitutional.
RECEIVING INTEREST ON REFUNDS
The Tax Administration Bill also contains a proposal to ensure that taxpayers are generally entitled to interest on a refund from the same date on which SARS would have been entitled to charge interest on unpaid tax.
VOLUNTARY DISCLOSURE PROGRAMME TO BE MADE LAW
The Voluntary Disclosure Programme (VDP) launched towards the end of 2010 which will run to the end of October 2011 also offers relief from interest on outstanding tax. The Tax Administration Bill proposes that a permanent frame work of relief for the voluntary disclosure of undeclared income or unpaid taxes be made law. This will ensure relief from administrative penalties, additional tax and criminal charges but not from any interest liable on outstanding taxes, as doing so would encourage taxpayers to deliberately default.
PAY-NOW-ARGUE-LATER RULE TO BE FAIRER
The Bill proposes changes to the so-called pay-now-argue-later rule to ensure greater fairness. Taxpayers will be able to seek a suspension of the obligation to pay the assessed tax before objecting to the assessment. While the suspension is being considered, SARS will not be able to collect the tax unless it has grounds to believe that the taxpayer intends dispersing the assets to avoid paying the tax, if the request is not granted. SARS is also prohibited from instituting sequestration or liquidation to collect tax until the dispute is finalised.
TAX OMBUD PROPOSED
The Tax Administration proposes a provision for a Tax Ombud who will hear complaints about administrative matters, poor service and failure by SARS to respect the rights of persons. The proposed Tax Ombud will have powers to review decisions and to mediate on complaints but will not be able to issue determinations such as ordering SARS to pay refunds.
Pieter Rautenbach |
