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After becoming aware of an increase in payroll deductions in the past years, the South African Reserve Bank (SARB) and National Treasury have engaged in discussions with stakeholders on the creation of a regulatory framework to govern payroll deductions. The proposal was open for public comment until 30 April 2018.
The SARB and National Treasury want to implement a stable and effective payroll deduction regulatory framework that aims to benefit employees by protecting them from unfair lending practices, affords them the opportunity to access financing at reasonable rates, promotes savings and productive credit and minimises the risk of conflicts of interest. The regulatory framework further aims to be transparent, safe and efficient to sufficiently protect employees. The Options The SARB and National Treasury have proposed three options which will form the base of the proposed regulatory framework for payroll deductions. Option 1: Employers will have no access to voluntary payroll deductions. Only statutory, court order, collective agreement and arbitration award deductions will be allowed. “This is the least complicated option and the playing field will be levelled as no preferential treatment can be given to certain creditors or institutions,” says Craig Rocher from Tax Consulting South Africa. Employees will also be protected against unauthorised deductions. This option may however affect employee benefit programs where employers are providing employees with financial assistance and employees may lose the cost-effective advantage of paying through payroll. Option 2: Employers will have limited access to voluntary deductions, meaning that only a set of approved voluntary deductions will be permitted. According to Rocher “this option allows for deductions that are beneficial to employees, such as their mortgage payments, savings and retirement annuities.” This will however require adjustments to payroll systems and certain financial institutions may feel disadvantaged when their deductions are not allowed. Option 3: Employers will have unrestricted access to voluntary payroll deductions, meaning an unregulated payroll deduction system. Under this option all parties will have equal right to deduct from an employee’s salary and there will also be improvements in employees honouring their financial obligations. Employees will have a choice in who gets paid from payroll and who doesn’t. “Collection preferences may occur under this option as the employer will then need to decide the hierarchy of payments” according to Rocher. Employees may also be exposed to unfavourable contractual terms and it may be difficult for them to stop or dispute payroll deductions. How will it affect employees? Employees will be affected no matter which of the options is chosen in the end. “They may be subject to additional bank charges should voluntary deductions no longer be allowed, and it should be considered that many employees don’t have access to internet banking to make their monthly payments, there for creating a lot of additional administration for them” says Rocher. The benefits should however not be disregarded, as many employees are subject to unfair lending terms and unreasonable interest rates, leaving them with almost no nett pay to take home. The way forward The SARB and National Treasury will be taking the public comments received in April under consideration and the preferred regulatory option will be communicated to stakeholders. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook: Tax Consulting South Africa
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Authored by: Darren Britz, Attorney at Tax Consulting
With the wave of anti-SARS sentiment currently washing over South Africa, paying historical value-added tax (VAT) may be a hard pill to swallow. This has resulted in many companies understating or underpaying their VAT and subsequently incurring colossal penalties in addition to the tax payable. However, paying historical VAT remains the most sensible course of action for any business with longevity and reputation in mind. It is at this point where SARS’ Voluntary Disclosure Programme (VDP) comes in, affording the opportunity to any taxpayers with unpaid taxes, including income tax, pay as you earn (PAYE) and most importantly VAT. The blinding spot light In the tax realm, two topics continue to dominate the media spot light; namely SARS’ systemic delay of VAT refunds and the Nugent Commission’s airing of SARS’ dirty laundry. It is perhaps not difficult to understand why tax morality in South Africa is at an all-time low, and why businesses continue to underpay on their VAT liabilities to SARS. To add insult to injury, the Tax Ombud earlier this month announced a fresh investigation into claims that SARS are not playing fair in how they handle taxpayer’s disputes. Undoubtedly, this will add to the already slippery and sharply steep slope that is taxpayer morality. While the sentiment is well shared, there is a broader consideration which is continually left out of the conversation. I am referring to the end game: eventually, SARS comes out on top. Remember, it is a criminal offence for a company to fail to pay its VAT and directors also face risk of being held accountable. At the same time, no SARS officials have been held to account for their handling of taxpayer dispute and refunds. Not yet anyway. Collecting with determination Tax collections and SARS enforcement measures are by no means comparable with other facets of South African life, such as perhaps the collection of e-tolls payments and speeding fines, which everyday seem to be losing more traction. The collection mechanisms at SARS continue to operate, with varying tactics, including tough audits, quick court judgments and taking money directly from taxpayers’ bank accounts. In that regard, SARS has hit the accelerator in its VAT collections and has gone far beyond their denying taxpayers VAT refunds, albeit that the latter was confirmed by the Tax Ombud. VAT audits are occurring more frequently and with harsher outcomes for repeat offenders or in respect of significant tax liabilities which extends over several years. Penalties aren’t optional It should come as no surprise that outstanding VAT debts will accrue both interests, roughly 10 – 11% per annum as well as percentage-based penalties. While a standard 10% VAT penalty is more often imposed, a worst-case scenario, where SARS finds evidence of deliberate tax avoidance, will permit the imposition of a penalty up to 200% of the VAT payable. Of course, nothing prevents SARS from making the allegation of tax avoidance, so the cards in SARS’ deck are well stacked. It also goes without saying that audit findings and penalty impositions remain on your tax record and therefore there is a risk of remaining on SARS’ radar for future audits. Once a SARS auditor has smelled blood, expect a difficult, agenda driven audit. VDP Relief If we push through the anti-SARS, anti-taxpaying mania and consider the possible solutions open to taxpayers, SARS VDP is at the forefront. The relief afforded includes:
A successful VDP, in most cases, allows for full remission of penalties. This leaves then just the tax and interest payable which, while leaving a sting, permits a total regularisation of tax affairs and avoidance of criminal prosecution. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook: Tax Consulting South Africa Author: Christopher Renwick, Attorney with Tax Consulting South Africa
By now, most people know what Bitcoin, or cryptocurrency, is. Some have even bought and sold a few and more impressively, some have found out how to turn cryptocurrencies into a business. Then, there are the “miners”. Following a process that involves no actual hard labour or rock breaking, crypto miners can generate cryptocurrencies by performing very complex calculations with the help of large amounts of computing power and specialised equipment. For many miners, once the cryptocurrency is “minted”, the question of “sale or hold” arises. In other words, do they sell what they have minted, or do they simply retain it for the purposes of generating a long-term value? Of course, these decisions have a myriad of consequences, some of which go unconsidered. Paying Your Dues One of the more serious and often forgotten consequences of mining (and distributing) cryptocurrencies is the tax aspect and arising liability. More importantly however is that, where cryptocurrencies are concerned, the advice being given to miners, traders and holders of crypto’s is inconsistent, inaccurate and potentially damaging for the recipient of such advice. Predominantly, most tax professionals giving advice hereon appear to have taken the stance that all crypto sales result in a generation of revenue and therefore income tax is payable. Whether this is owing to extreme conservatism or a lack of understanding, the principle that all crypto sales lead to revenue is, often, incorrect. Long-standing Debate The test for whether proceeds received from cryptocurrency sales comes down to the much debated and heavily adjudicated argument of ‘capital versus revenue. Without digging into the debate and adding a voice to what is possibly the most saturated contestation in tax law, one quite simply cannot apply a blanket approach to all crypto disposals. SARS’ own website provides a differentiation between Capital and Revenue by stating: “Whilst not constituting cash, cryptocurrencies can be valued to ascertain an amount received or accrued as envisaged in the definition of “gross income” in the Act. Following normal income tax rules, income received or accrued from cryptocurrency transactions can be taxed on revenue account under “gross income”. Alternatively, such gains may be regarded as capital in nature, as spelt out in the Eighth Schedule to the Act for taxation under the CGT paradigm.” All factors need to be considered and specifically, the factors around crypto miners need special attention. Crossing the Rubicon There are those miners that sell upon minting crypto’s and those that hold them for lengthy periods. However, the advice being given to these miners is a complete blanket approach. Tax practitioners seem to be opting for the easiest route of advising clients that all proceeds being generated from crypto disposals are revenue in nature, effectively implying that every crypto transaction is part of a profit-making scheme. Only Caesar would benefit from such an approach. As a tax professional it is not reasonable to simply advise that all crypto-traders, miners and sellers should be subject to the same taxation standards. There are too many factors to consider with everyone to make a blanket judgement call. Consider the implications of advising a capital asset holder of the need to pay income tax on a disposal. The monetary difference alone is enough to raise the hair on the back of your neck. Not to mention the professional negligence. For those involved in the crypto sphere, it is necessary to make sure that the advice you are being given is both sound and informed. Consult two tax professionals or better yet, consult ten. Alternatively, save yourself all that run around and ask the right tax professional. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook: Tax Consulting South Afric Author: Christopher Renwick, Attorney at Tax Consulting SA
A trend of increased delays and frustration with the South African Revenue Service’s (SARS’) dispute resolution process, are becoming apparent among taxpayers and tax practitioners alike. The reasons for this appear to be numerous. The common, albeit perhaps slightly misplaced, view is that SARS is operating unfairly, however in my experience, often the frustrations come down to taxpayers being unfamiliar with the dispute resolution process and creating their own difficulties. However, as experts in the field, we have experienced several SARS officials dragging their feet. Don’t get me wrong. This is not the case across the board, that would not be fair to say. However, smoke and fire do go hand in hand. What should you do? What would be fair to say, or rather ask, is, what options you have if your matter stagnates, for whatever reason? The problem perhaps lies in the fact that SARS presides over its own process, and there are no cost implications for SARS if your matter crawls along. Do you continue to bash your head against the proverbial wall, approach the Ombudsman or cut your losses and run? For some, it would come as a surprise that an alternate option exists. Consider the Motion Court. The Motion Court The Motion court (for those not in the legal sphere) is a court held at the High Court of South Africa (ignoring the magistrates court for now) that follows court procedure and is presided over by a High Court Judge. Not only does the Motion court come with a highly skilled Judge, but also the added benefit of expediency. Where a trial date may be 18 months after application (in the Johannesburg High Court 2 years) a “motion date” may be less than 3 months from date of application. For those legal minded professionals reading closely, you are probably jumping on your chair and emphatically listing the differences between opposed and unopposed motions, the timing thereof and cost implications etc. While there are differences between the two, the principles of expediency, cost and judicial approach remain the same. It is important to add that, whilst you may be left powerless under the dispute resolution process, the High Court is bestowed with inherent discretionary power to grant you any appropriate relief that will solve your problem. An added sweetener is the fact that SARS may have to pay your legal costs as well. This all sounds picturesque and perhaps a little too good to be true? A Big Win Well, it would be if we had not just been successful in this very process. Without divulging any confidential information, we had the pleasure of assisting a taxpayer whose matter had been dragging for over a year. An information gap existed in the determination of the taxpayer’s tax liability and the information that was sought. However, SARS were not forthcoming with the information. On behalf of the taxpayer, we approached the Motion Court with two alternate prayers. The first prayer was a request that SARS issue the taxpayer with all the necessary information to allow the taxpayer to fully understand the exact origin of the liability raised against the taxpayer. I should probably mention the liability was sufficient for the client to consider the amount material enough to take action. The second (or alternate, for my legal colleagues) prayer was for the expulsion of the liability given that no grounds could be given to the taxpayer for the origin of the liability. Remember that information gap? In Closing Leaving the finer details of the motion and its ensuing arguments aside, the taxpayer came out on top and the alternate prayer was made an order of court. This means that the taxpayer’s liability was expunged. The cherry on top was that SARS was ordered to pay the taxpayer’s costs. What a victory for this taxpayer and with lessons perhaps, for all taxpayers burdened with stagnant matters that are suffering frustration. An alternative avenue for dispute resolution has presented itself to the tax paying community. Just make sure you take an attorney down the path with you. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from taxpayers to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook: Tax Consulting South Africa Author: Jean du Toit, Attorney at Tax Consulting SA
The South African Revenue Service (SARS) has created some nervousness in the South African tax base by embarking on an initiative to criminally prosecute taxpayers who fail to submit their tax returns. Whilst the threat of a criminal record and a fine ought to serve as sufficient incentive to submit one’s return, it is perhaps worth pointing out that submission of returns also gives taxpayers access to the Voluntary Disclosure Programme (VDP), which affords acquittal from far more serious criminal sanctions. Criminal sanctions under the TAA South African taxpayers are not unfamiliar with SARS’ aggressive implementation of the authority afforded to it under the Tax Administration Act No. 28 of 2011 (TAA) insofar as the collection taxes and the imposition of penalties. With SARS’ new initiative, taxpayers have now seen that SARS’ powers go beyond imposing monetary penalties. Generally, failure to comply with the prescripts of the TAA amounts to a criminal offence, which is subject to a fine or to imprisonment for a period not exceeding two years. These offences, as we have now seen, may result in a fine and a criminal record, but rarely ends with the taxpayer behind bars. A criminal record is certainly not something to brush aside, but the TAA also makes provision for more serious sanctions where there is intent to evade tax, which can result in actual jail time for the taxpayer. Reprieve under the TAA - VDP The TAA is, arguably, partisan to SARS’ cause, but it does offer non-compliant taxpayers some solace if they wish to come clean. SARS allows taxpayers to avoid criminal prosecution and regularise their tax affairs by making a disclosure under the VDP, of which the benefits include:
Taking into consideration the potential ramifications non-compliant taxpayers might face, the VDP represents an appealing olive branch. The VDP, however, comes with an important caveat, which is that taxpayers only have access if they do not have any outstanding returns. VDP applications will be discarded without further notice if the taxpayer in question has outstanding returns. Take Away It is worth noting that the new initiative, to close more criminal cases, does not represent a widening of SARS’ powers, as it has always had the discretion to do so. What the initiative illustrates is SARS’ no tolerance policy on outstanding returns. Taxpayers who are not deterred by the sanctions for not submitting returns must keep in mind that they cannot regularize other instances of non-compliance under the VDP, instances which carry far more severe sanctions. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook: Tax Consulting South Africa Authors: Thamsanqa Msiza, Senior Tax Consultant at Tax Consulting and Darren Britz, Attorney at Tax Consulting
The South African Revenue Service (SARS) announced earlier this year that the 2017/18 tax filing season is to kick off on 1 July 2018, however their e-filing system is already allowing submission of tax returns. SARS also appears to drive tax compliance home with renewed vigour this year, with a shorter tax season, as well as a couple of enhancements on the new 2017/18 tax return. Here are important hints for the tax filing season:
If the above advice s used as needed, taxpayers should be able to be rest assured of a tax season that is relatively hassle free. About the authors: Thami is a senior tax consultant with Tax Consulting, specialising in personal taxes. Darren is an admitted tax attorney with Tax Consulting specialising in SARS dispute resolution and any cases where amounts are due to SARS. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook: Tax Consulting South Africa Author: Tasia Brummer, Immigration Specialist at Xpatweb
Companies may expect “a knock on the door” from the Department of Home Affairs (DHA) to conduct required audits and investigations on their employment practices of immigrant workers, Director from the DHA’s Corporate Account Unit, Ben Makhalemele has warned. He made this statement while presenting at a recent event, alongside Moeketsi Seboko, Immigration Manager of Xpatweb, to highlight the latest updates and expected changes within the DHA, as well as the expectations of South African companies employing foreign nationals. This follows the DHA having picked up several incidents of companies employing foreign nationals without proper vetting of the required work visas. Makhalemele also urged employers to keep a copy of the Immigration Act, no 19 of 2002, as amended (the Act) on their premises to ensure that they are adhering and complying with the stipulated regulations when employing foreign nationals. The Act evidently states that an employer may under no circumstances employ a foreign national without the correct visa. Although employers may never be certain on the validity of their foreign employees’ visas, it is recommendable to do an immigration audit to ensure they are currently compliant and that the necessary policies are put in place so that correct processes are followed with new foreign national employees. Closing the gap Makhalemele further noted that the immigration system in South Africa is no longer purely dictated by the DHA and appealed to employers to give their input and cooperation to enable continuous improvement and thereby position the country to reach its economic goals. After all, foreign nationals play an important part of the country’s success by bringing in the necessary skills required for high-demand projects. It is therefore imperative that employers understand the importance of their role within the South African Immigration law. Employer Duties and Obligations Makhalemele placed emphasis on the ‘Duties and Obligations’ of employers, reiterating that entities employing foreign nationals without the required valid work visa are viewed by the Department as knowingly “aiding and abetting” the illegal foreigner on their premises and will therefore be liable to certain penalties. Presumably, the person whom will be deemed responsible for the aforesaid implications, will be the Human Resource Manager and/or the person responsible for the company. Should you have any questions or require assistance pertaining to the work visa process and/or the validation of visas, please do not hesitate to contact us on contact@xpatweb.com. Click here for link to Immigration Act on website. Click here for link to presentation for Ben Makhalemele. Click here for link to presentation for Moeketsi Seboko. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za For more information on Xpatweb please visit: Website: http://www.xpatweb.com/ Author: Jonty Leon, Financial Emigration Legal Specialist at Financial Emigration, a division of Tax Consulting SA
Emigrating from South Africa is not as simple as packing up your bags, jumping on a plane and setting up shop somewhere else. Unfortunately, there is still the issue of tax and no matter where you go, the taxman remains interested. The South African Reserve Bank, SARS and even the globally agreed Common Reporting Standards (CRS) want to know your movements. Home Affairs have also climbed on this bandwagon in respect of the White Paper released last year which recommends that all South Africans abroad must report themselves correctly, for good recordkeeping and for the authorities to know their whereabouts. The only way to formally place yourself on record for all these items is to undertake the financial emigration process. This means that you will be noted with SARS (which covers your personal tax status and CRS) and the SARB (which covers your bank account status) that you are no longer “ordinarily resident” in South Africa for fiscal purposes. By doing this, your status means that the South African authorities no longer have a reporting claim on your world-wide income and capital gains. No escaping SARS A worrying factor is that the many South Africans abroad seem to think they escape SARS, for the mere reason that they are living somewhere else. Whilst the circumstances and reasons for justification vary, from an attorney’s perspective, the following factors are very worrying:
Guilty until proven innocent When it comes to tax compliance, you are guilty until you prove your innocence. To get around world-wide taxes as an expatriate, the classic defence is that you are not “ordinarily resident” in South Africa. This onus is discharged by undertaking the financial emigration process, which is a SARS and SARB process, whereby you are noted on record as having emigrated. From a tax legal defence strategy, two items are important:
Final Solution Financial emigration provides a final risk management solution for expatriates to not have to declare their world-wide income and capital gains. This also provides a solution to CRS and Exchange Control restrictions. For those who need convincing to do the correct thing, we suggest they equate this to insurance. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook: Tax Consulting South Africa Author: Jean du Toit, Attorney at Tax Consulting SA
Taxpayers should be aware that if you have outstanding tax debt, SARS has the power to reach into your bank account and take the outstanding funds by instructing your bank, as its agent, sometimes even without notifying you. Chances of this happening increase especially where the end of the tax year is approaching and where SARS is below budget. In fact, the Tax Administration Act (“TAA”) provides that SARS may notify any third party to pay any money it holds on your behalf to SARS. Failure to comply makes the bank (or even your employer) personally liable for your debt. SARS is kind compared to the French The French Revenue Authority is particularly known for having piloted this tactic. In France, even if the Revenue Authority had no basis to collect, you will be held liable for the legal fees if there is some fault on your part, such as not responding to notices or not having kept your taxpayer particulars up to date. Taxpayers are especially annoyed if SARS acted on a false tax debt or if proper procedure was not observed. SARS is required to adhere to the procedure prescribed by the TAA, which imposes procedural requirements onto them; for example, to send final demand ten business days before it proceeds with collection. Alarmingly, however, there are cases where SARS have withdrawn funds from taxpayers’ accounts without them being notified. Whether this is a result of deficient communication from SARS or a flagrant disregard for the prescribed tax procedure, is not relevant, as the withdrawal can be reversed either way. No head in the sand Taxpayers must be alert when it comes to any attempts from SARS to communicate with them, as ignorance of the legal process will be to your detriment. Almost always the biggest mistake taxpayers make is ignoring their tax status, perhaps hoping the problem will go away. Here are some useful tips:
The strong collection powers of SARS must be placed in perspective that the law must protect society to ensure that everyone pays its taxes, and defaulters must effectively be dealt with. Unfortunately, the innocent taxpayer may also get the treatment under these harsh provisions, but as tax is ultimately a function of law, in these instances there is always a legal recourse. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook: Tax Consulting South Africa Author: Natasha Wilkinson, Admitted Attorney at Tax Consulting SA With financial institutions now directly reporting interest income to the South African Revenue Service (SARS), an increase in the number of cases where individuals are receiving tax assessments on income that does not belong to them, has become evident. Often, the reason is a miss-match of information where SARS compares the income on your tax return with third-party financial information and notes undisclosed income. This gives the SARS official the legal basis to raise an additional tax assessment. However, the real culprit seems to be the technology where taxpayer information gets mixed-up, which makes pinning down who is at fault rather challenging. Third parties are required by law to report financial information to revenue authorities. A good example is your IRP5 certificate where SARS compels your employer to report your income directly to them. From as recently as January 2018, the same is happening with interest, dividends and other financial transactions, which are being reported to SARS from across the globe. This has given rise to speculation that in the foreseeable future, a tax return may even not be necessary, as SARS would electronically have access to everything already. However, as personal taxes are becoming more digital, growing pains especially for the uninformed taxpayer, can be expected. Ignorance is a plan, but not a good one Taxpayers are factually treated as guilty until proven innocent and with our courts actively enforcing extremely strict deadlines on tax disputes, there have been many cases in South African tax law where a taxpayer should not have been assessed, but missed a deadline. Thus, the mistake became final and the taxpayer was required to pay the tax. It is t therefore important to act immediately when finding an incorrect tax assessment. In this case, it is wise to take a formal and legal step. Merely calling SARS or your tax practitioner who will tell you that he/she has spoken to SARS is not sufficient. The formal approach is set out in Rule 6 of the rules promulgated under section 103 of the Tax Administration Act, No. 28 of 2011, where a document is prepared to SARS calling upon them to provide reasons for the tax assessment. Where SARS has attributed, for example, interest income reported from financial institutions to you, they will tell you in their response from what accounts and the amounts involved. SARS will, however, only provide this detail where you have correctly adhered to Rule 6; including the time periods set out in this Rule for asking for the reasons. Once you have received these details from SARS and you have established that there is indeed a miss-match of information, you will still need to prove that the income is not yours. You only have one chance to challenge SARS Where the case is not resolved, taxpayers are legally tied to object all the way to the tax court. The evidentiary “pudding” for the taxpayer is therefore the formal objection, which is also another formal legal step required by Rule 7 of the Rules. The formal objection under Rule 7 would need to set all the grounds upon which the taxpayer does not agree with the tax assessment, together with documents setting out proof . Taxpayers should include the right mix of ingredients in their objections to prove that the income is not theirs, this includes affidavits from financial institutions, the taxpayer himself and/or any other person with personal knowledge that the income is not the taxpayer’s. Where this is done properly, taxpayers can be sure to have a new assessment issued. This time being with a more accurate representation of income attributable to them. ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook: Tax Consulting South Africa |
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