LSSA TAA slides adapted from SAIT

Report
Adapted for the LSSA - Prof Daniel N Erasmus
Tax Administration Act 2011
1
•
More Info – www.IITF.net More notes & Advanced
Diploma In Tax Procedural Law
•
http://www.TaxRadar.net- client funding
•
Prof D N Erasmus – [email protected]
•
http://www.ErasmusOnTax.com
•
083 458 8422
•
List of cases
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BALANCE BETWEEN SARS’ POWERS & TAXPAYER RIGHTS
TAA seeks to achieve a balance between powers & duties of SARS
and rights & obligations of taxpayers thereby enhancing equity and
fairness of tax administration
SARS
TAXPAYERS
Powers
&
Duties
Rights
&
Obligations
3
DESIGN OF TAA: MAIN CHAPTERS - HIGHLIGHTS
DESIGN OF TAB: MAIN CHAPTERS
Chapter 1
Definitions
Chapter 11
Recovery of Taxes
Chapter 2
General Administration
Chapter 12
Interest
Chapter 3
Registration
Chapter 13
Refunds
Chapter 4
Returns and records Chapter
Chapter 14
Write-off or Compromise of tax debt
Chapter 5
Information Gathering
Chapter 15
Non Compliance
Chapter 6
Confidentiality of information
Chapter 16
Understatement penalty
Chapter 7
Advance Rulings
Chapter 17
Criminal Offence
Chapter 8
Assessment Chapter
Chapter 18
Reporting of unprofessional conduct
Chapter 9
Dispute Resolution
Chapter 19
General Provisions
Chapter 10
Tax Liability & Payment
Chapter 20
Transitional Provisions
4
TAA: BALANCE BETWEEN POWERS & RIGHTS (1)
INFORMATION GATHERING & ENFORCEMENT
SARS POWERS
Information gathering
Inspection at premises without prior notice
Request for information: Any‘relevant
material’ re identifiable taxpayers & group of
taxpayers
Taxpayers Rights
Limitation on information (only if relevant to tax Act)
Protection of right against self-incrimination
PAJA & Secrecy to protect privacy rights
SARS Administrative Complaint Resolution
Tax Ombud / Public Protector / Courts
Limited grounds (e.g. identity of occupant)
Private dwelling – occupant must give consent
Reasonable specificity of request
Limited to records reasonably maintained
Interview at SARS office & production of
relevant material
Time extension must be considered
Just cause basis for refusal
Only if intended to clarify issues of concern &render
audit unnecessary
Reasonable specificity of request
Field audit or criminal investigations
Prior Notice of at least 10 days & taxpayer may
request different date
5
TAA: BALANCE BETWEEN POWERS & RIGHTS (2)
INFORMATION GATHERING & ENFORCEMENT (cont.)
SARS
TAXPAYER RIGHTS
POWERS
Audit
Audit selection on rational basis (random or risk)
Only authorised SARS officials may audit & must produce authorisation
Audit reports on stage of completion to taxpayer
Notice of inconclusive audit to taxpayer
Letter of audit findings to taxpayer
Taxpayer may respond to findings prior to assessment
Criminal
Investigations
Separation between audit and criminal investigation
Only authorised SARS officials may investigate
Criminal investigation: Adherence to rights as suspect
Taxpayer must be informed of inconclusive investigation
Only senior SARS official may lay complaint with NPA
Inquiry
Authorised by Judge of High Court upon application
Independent oversight of inquiry
Confidential & protection against incriminating evidence
Search &
Warrant: Issued by Magistrate/Judge of High Court upon application
seizure
Warrantless: Narrow circumstances
Carrying out: Decency & Order; Inventory; Copies/originals;
Protection of privileged documents; Application for return/damages
6
TAA: BALANCE BETWEEN POWERS & RIGHTS (3)
SARS POWERS
Recovery
Debt relief
Personal liability
Repatriation of
foreign assets
Preservation of
assets
RECOVERY
TAXPAYER RIGHTS
Statutory limitations (e.g. TAB; Insolvency Act; Companies Act)
Period of limitations reduced to 15 years
Constitutional limitations (PAJA, property rights etc.)
SARS Administrative Complaint Resolution / Tax Ombud /
Public Protector / Court review
Civil procedural rights (e.g. Rescission of judgments)
Deferment by instalment payment agreements
Write off or compromise agreements
Suspension pending outcome of dispute
Remittance of penalties and interest
Voluntary Disclosure Programme - penalty relief
Prescribed criteria in TAB before 3rd party will be held liable
Normal court remedies during recovery
Prescribed judicial procedure before Judge of High Court
Prescribed judicial procedure before Judge of High Court
7
TAA PENALTY REGIME
TAA:
Penalty Regime
across taxes
A: Administrative
non-compliance
Penalty
Targets administrative
non-compliance
B:Understatement
non-compliance Penalty
Targets serious noncompliance & tax evasion
C: Criminal
Offences
General offences
across taxes
8
Now for a more detailed look
You will need a copy of the TAA in front
of you to mark up with points I make
SLIDES ADAPTED FROM THE SARS
PRESENTATION TO THE SELECT
COMMITTEE ON FINANCE
9
SARS’ MANDATE
• SARS is the institution created to effect optimum
revenue collection
• SARS’ objectives are the efficient and effective:
 Collection of revenue, and
 Control over the import, export, manufacture, movement,
storage or use of certain goods
• To achieve its objectives SARS must secure the efficient and
effective, and widest possible,enforcement of national Tax and
Customs legislation
10
TAX LEGISLATION
• Tax legislation comprises two aspects:

Tax liability provisions

Tax administration provisions
• TAA only deals with tax administration
•


Modern framework is required for:
Administration of the collection of revenue
Consolidating duplicate & aligning disparate
requirements in existing law
11
WHY A TAX ADMINISTRATION ACT?
•


Rationale for tax administrative review:
Adapting to fast developing world
Lowering Cost of Tax Administration
• TAB incorporates into one piece of legislation:

Certain generic administrative provisions

Currently duplicated in the different tax Acts
• Simplification of provisions > enhance clarity of law
12
REWRITE OF INCOME TAX ACT
TAA is preliminary step to the re-write of the
Income Tax Act & assists in re-write by dividing the
work into more manageable parts – administrative
part comprises about 25% of Act
13
MODERNISATION PLATFORM
The TAA seeks to provide a foundation for
further modernisation in the context of:
• Single Registration
• Self Assessment
• Accounting Transformation
14
MODERNISATION PLATFORM
The TAA seeks to provide a foundation for
further modernisation in the context of:
Single registration
Self Assessment
Accounting transformation
15
INTENDED IMPACT OF TAA
● A simplified
and harmonised TAB should benefit
both taxpayers & SARS
● Compliance
burden on taxpayers should reduce as:
Taxpayers will have only one administration Act
Act sets out all duties & rights with regard to all tax laws in
simplified form
● Administrative
burden on SARS should reduce as:
Unnecessary & duplicate provisions simplified
Inefficient or ineffective provisions removed
10
16
INTERNATIONAL BEST PRACTICE IN TAX ADMINISTRATION
In drafting the TAA, due regard was given to principles
of international best practice in tax administration (read with ss 195 of the
Constitution & 4(2) of the SARS Act, placing s 237 Constitutional obligations
on SARS):
• Equity and fairness
• Certainty and simplicity
• Efficiency
• Effectiveness
The impact of International Law – OECD Guidelines & eg. ‘foreseeably
relevant’ information
17
TAX COMPLIANCE
● The
TAA recognises:
Majority of taxpayers who are compliant & want a more
modern & responsive revenue administration.
Minority who seek to evade tax or defraud the government
● Tax
evasion undermines compliant taxpayers’ morale
and places an unfair burden on them if not countered
● SARS
must actively pursue tax evaders to maintain
confidence in integrity of tax system
● Stricter
enforcement powers therefore required to
target increasingly sophisticated
tax evaders
11
18
TARGETED POWERS UNDER TAA
Tax
Evaders
Generally
Compliant
Taxpayers
Stricter enforcement,
assessment &
collection powers
Less strict
powers
Better
service
Compliant Taxpayers
19
CONSTITUTIONAL COMPLIANCE
 TAA designed with due regard to constitutional rights of taxpayers &
constitutional obligations of SARS

For example, to ensure consistent treatment and greater equity & fairness,
certain discretionary powers linked to objective criteria.

Constitutionality of TAA reviewed by external constitutional experts

TAA does not seek to re-codify basic rights of taxpayers as they apply in any
event, e.g. right to administrative justice
20
INTERNATIONAL BENCHMARKING
● Drafting
of TAA was informed by international best practice
● A comparative
● Countries
evaluation of tax administration laws of other countries
evaluated have practical experience with tax administrative laws over
long period
● Countries
evaluated: Australia, Botswana, Canada, New Zealand, UK, USA
•BUT also consider OECD Guidelines
21
TAA PRE-INTRODUCTION CONSULTATION PROCESS
• SARS was assisted during drafting by:
International tax experts from IMF
Local constitutional experts
Internal SARS stakeholders & National Treasury
• Closed workshop with external tax experts May’09
•First draft for public comment: period 29 Oct’09 to 28 Feb’10 & external workshop on first draft in Mar’10
• Constitutional review by external constitutional experts & pre-certification by State Law Advisers
• Workshop with Economic Sectors Cluster in Aug’10
•Cabinet approval for introduction in Parliament 1 Sep’10
•Second draft for public comment Oct’10 to Dec’10 & external workshops Jan’11 & Feb’11
•Final certification Mar’11
22
CONSULTATION PROCESS: SIGNIFICANT CHANGES
● Significant











changes following public comments:
Introduction of Tax Ombud
Removal of advance notice of leaving South Africa
Limitation of information request to available records
Reasonable specificity limitation on information requests
Protection of legal professional privilege during seizure
Right to claim damages arising from search & seizure
Reportable arrangement failure no longer an offence
Estimated assessments – burden of proof on SARS
Interest ‘neutrality’ & remittance of interest
Security for ‘audited’ refund
Permanent VDP
23
TAA ISSUES
• General reception of TAA positive
• However, during the extended consultative process
mainly the following have triggered debate:
•
•
•
•
•
•
Tax Ombud
Ambit of information gathering powers
Search and seizure without warrant
No legal professional privilege for tax practitioners who
are not lawyers
Secrecy disclosure extension
Collection powers extension
24
DESIGN OF TAA - GENERAL APPROACH
• The core provisions required for the administration of
the tax system were identified and incorporated
• A ‘step by step’ methodology followed to align the
structure of the TAB to the administrative ‘life cycle’ of
taxpayers
Organisation in functional categories will accentuate understanding
Taxpayers & SARS will know which step applies to issue at hand
• The legislative style followed is a new ‘simplified’
manner of legislative writing, i.e. shorter sentences,
shorter sections and less formalistic
language.
25
INTERPRETATION
• Interpretation
Terms used in the TAA which are defined in the tax Acts retain tax Act’s defined meaning in
the TAA unless context indicates otherwise orspecifically defined in TAA
Terms defined in the TAA apply to tax Acts unless the context in the tax Act indicates
otherwise, or if they are specifically defined in the relevant
tax Act
• Each tax Act will be amended to provide that:
“Any administrative requirement and procedure for purposes of the performance of any duty,
power or obligation or the exercise of any right in terms of a tax Act is, to the extent not
regulated in this Act, regulated by the Tax Administration Act”
• Inconsistency between TAA & tax Act > tax Act prevails
• NB: Administrative provisions that are specific to a tax Act or the relevant tax type remain
in that Act
20
26
CHAPTER 1: DEFINITIONS
• New defined concepts:
•Assessment > now includes self-assessment & excludes ‘decision’
•Biometric information > provides for less intrusive data
•Date of assessment > now means date of issue of assessment and not
due date for payment
•Effective date > determines date from which interest accrues
•Official publication > clarity on what constitutes SARS’ practice generally
prevailing i.e. applicable to whole of SARS
•Relevant material > means information forseeably relevant & determineswhat SARS
may obtain by using its information gathering powers
•Self-assessment > determination by taxpayer of tax payable
•Serious tax offence > relevant for referral of audit for separate criminal
investigation
•Taxable event > means occurrence affecting liability for tax
•Tax > defined for purposes of the administration of the TAA & includes penalties & interest
27
CHAPTER 2: GENERAL ADMINISTRATION (1)
• Purpose of Act
Effective and efficient collection of tax
Alignment of the administration provisions of tax Acts
Consolidation thereof into one piece of legislation
• Administration of the Act
SARS is responsible for the administration of the Act
Under the control or direction of the Commissioner
Includes administrative assistance to foreign governments under DTA i.e. information
exchange, recovery and service of documents
• Application of the Act > applies to every person liable to comply with a provision of a tax Act
• Practice generally prevailing - sources:
General ruling
Interpretation note
Practice note
Public notice issued by senior SARS official / C:SARS
28
CHAPTER 2: GENERAL ADMINISTRATION (2)
• Limitation of administrative powers
Exercise of powers or obligations by SARS must be related to & within ambit of administration
of tax Acts
Three tier decision making levels (more serious powers reserved for C:SARS or delegated
senior SARS officials)
Conflict of interest provisions > prohibit involvement in matters with personal, family, financial
etc. relationships
Identity Cards > All SARS officials who administer tax Acts
Withdrawal or amendment of decisions > request driven & limited if
retrospective
Delegations must be in writing with defined mandate
Authority to act in legal proceedings > only certain officials
• Powers and duties of the Minister
•May be delegated except for power to issue regulations under
TAA or appoint Tax Ombud
29
CHAPTER 2: TAX OMBUD: BACKGROUND
• The
creation of an independent and effective recourse for taxpayers is in line
with the objective of TAB to balance powers & rights
• Background
to creation of Tax Ombud:
•Tax Ombudsman on lines of UK Adjudicator recommended by Katz Commission
•Joint Standing Committee on Finance’s response was to suggest tax unit in Public
Protector
•SARS Service Monitoring Office (SSMO) was intended as first step in improvement
•Creation of Tax Ombud was foreshadowed at launch of SSMO
30
CHAPTER 2: TAX OMBUD: ROLE
•Tax Ombud is a mechanism to address service failures & failures to
respect taxpayer rights
• Two kinds of disputes with SARS:
•Disagreement on interpretation of law: normal dispute resolution steps i.e.
Objection & Appeal> ADR> Tax Board> Tax Court> Normal Court system
•Disagreement on administration of law: administrative issue
resolution steps i.e. internal service issue resolution> SSMO>
Tax Ombud > Public Protector/normal Court system
• Taxpayer
protection & remedies: specific in clauses
dealing with SARS’ powers PLUS general e.g. request
to review decisions & Tax Ombud
25
31
CHAPTER 2: TAX OMBUD: STRUCTURE & MANDATE
•Appointment: Minister of Finance & Minister
determines terms of office
•Staffing: Seconded SARS staff
•Funding: SARS’ Budget
•Mandate: Review complaints regarding service,
procedural or administrative matters
•Powers: Review and mediatory
•Reporting: Directly to Minister of Finance
32
CHAPTER 3: REGISTRATION
• Registration requirements regulated for all taxes
•Platform for single registration
•Registration period of 21 business days across most taxes
•Biometric information may be required e.g. VAT registration > to
counteract identity & other fraud
• Obligation to inform SARS of changes in registered particulars to ensure SARS has current
information
•e.g. Change in address (including physical, postal & electronic), banking
details & representative taxpayer
•Commissioner may prescribe additional information by notice
• Taxpayer reference number
•SARS may allocate in respect of one or more taxes
•Use of number compulsory in all correspondence to enable SARS to process taxpayer
information more efficiently
•SARS may disregard correspondence without allocated reference number
33
CHAPTER 4: RETURNS AND RECORDS
• Submission of return
•Obligation imposed by relevant tax Act
•If imposed, form and manner of return regulated by TAB
•Taxpayer may submit amended return before original assessment to
correct errors
• Third party returns
•Prescribing types of information required from third parties in tax Act inflexible & voluminous
•Information required & periods now required by public notice by C:SARS
• Further or more detailed returns > may be required by SARS
• Statement required regarding extent of examination reflected in accounts / financial
statements submitted
• Record retention
•TAB general record requirement + record requirements in tax Acts
•Manner of record keeping prescribed
•Audit or dispute: Records must be retained until concluded
28
34
REGISTRATION & COMPLIANCE ISSUES
•
•
•
•
Sections 22 to 39
Biometric registration
Registration number for all taxes registered
s24(4) SARS may consider a return or other
document submitted by a taxpayer to be invalid
if it does not contain the reference number
referred to in subsection (3)
35
REGISTRATION & COMPLIANCE ISSUES
CONTINUED
• Filing various tax returns & keeping records – 5
years except always for periods no returns
submitted – s29(3)
• Reportable arrangements – listed tax benefits
36
REGISTRATION & COMPLIANCE ISSUES
CONTINUED
• Reportable arrangement penalty s 212 (1) A
‘participant’ who fails to disclose … a
reportable arrangement … is liable to a
‘penalty’, for each month that the failure
continues (up to 12 months), in the amount of—
37
REGISTRATION & COMPLIANCE ISSUES
CONTINUED
• (a) R50 000, in the case of a ‘participant’ other than
the ‘promoter’; or
• (b) R100 000, in the case of the ‘promoter’. (2) The
amount of ‘penalty’ determined under subsection (1) is
doubled if the amount of anticipated ‘tax benefit’ for the
‘participant’ by reason of the arrangement (within the
meaning of section 35) exceeds R5 000 000, and is
tripled if the benefit exceeds R10 000 000.
38
CHAPTER 5: INFORMATION GATHERING (1)
• Information gathering powers are substantially supplemented / extended to address
protracted ‘information entitlement’ disputes & waste of resources
• Powers more aligned with international practice:
•Rationale for wide tax information gathering powers = to achieve equitable levying of taxes &
discharge duties to correctly assess taxable income, revenue authority should have access to
all information which might affect liability to tax
•“Information is the lifeblood of a revenue authority’s audit activities”
•Whole burden of taxation would fall only on honest taxpayers if revenue authority had no
power to obtain information about taxpayers who may be
negligent or non-compliant
• Concerns about tax ‘fishing expeditions’ – see ‘foreseeably relevant’ and OECD meaning:
•Concept applies in criminal cases > ‘fishing’ to see if case exists, BUT tax audits can convert
•Tax audits > impossible to audit all taxpayers thus random or risk based selection of
taxpayers for audit, BUT does random ever really exist?
39
CHAPTER 5: INFORMATION GATHERING (2)
• New / extended powers:
•Inspections > To determine identity of the person occupying business premises & whether
registered for tax
•Requests for information - ambit extended to:
• Identifiable taxpayers (e.g. taxable event indicates existence of person liable
for tax but name unknown)
• Classes of taxpayers (e.g. taxpayers involved in certain potential tax
avoidance structures)
• Information required for revenue estimation > SARS may request this
information but failure to submit does not constitute a criminal offence
(specifically excluded in Chapter 17)
•Informal examination / interview at SARS office > aim = to clarifyissues of concern to render
further audit unnecessary
•Search & seizure without warrant > narrow exception to warrant requirement – should inter
alia assist in tax fraud investigations
40
CHAPTER 5: AUDIT SELECTION (1)
• Audit selection basis > now specified in TAA and may be on
random (Constitutional?) or risk assessment basis
• Random basis:
•Regarded as perfectly rational basis for audit in most countries
•Inevitably, there will be a random aspect to those who are selected
“Often it will be impossible to determine from the face of the return
whether any impropriety has occurred in its preparation. A spot check or
a system of random monitoring may be the only way in which the
integrity of the tax system can be maintained.”
[Supreme Court of Canada - R v McKinlay Transport 47 CRR 151 (SCC) at 168]
•In the USA, the IRS is known to have a program that randomly targets taxpayers for audit on a
statistical basis – BUT a ‘statistical basis’ is still ‘a basis’ for selection, not entirely random
41
CHAPTER 5: AUDIT SELECTION (2)
• Risk assessment audit selection basis
•Involves assessing the risk profile of taxpayers (“risk assessment”) and then allocating
resources in accordance with the risk profiles (“resourceto risk allocation”)
•Benefits of risk assessment:
• More targeted audits and efficient use of SARS’ and taxpayers’ resources
• SARS able to address emerging tax risks in real-time & provide tax certainty
to taxpayers sooner
• Quicker guidance on tax matters
• Reduces need for protracted audits (typically some years after targeted
transactions occurred)
• Limit disputes
• Reduces the incidence of tax underpayments, administrative penalties and interest
•Obtaining real-time “relevant information” from taxpayers is key to effective risk
management
42
CHAPTER 5: AUDIT V CRIMINAL INVESTIGATIONS (1)
• If during an audit it appears that a person may have committed a serious tax
offence then:•case must be referred to a SSO for a decision whether to conduct a criminal investigation;
•investigation proceeds with due adherence to rights of taxpayer as suspect; and
•from date of referral audit must keep audit and investigation material separately
• Use of audit material
Relevant material obtained by audit • before referral > may be used in an investigation
• after referral > may not be used in criminal proceedings, BUT may be used to further criminal
investigation
• Use of information obtained via an investigation
•may be used for audit or prosecutorial purposes
43
CHAPTER 5: AUDIT V CRIMINAL INVESTIGATIONS (2)
Split
Audit
Audit >
prima facie
serious
offences
No information flow ???
Information flow
Criminal Investigation
44
CHAPTER 5: SEARCH & SEIZURE WITHOUT WARRANT (1)
• This power may only be invoked if a senior SARS official on
reasonable grounds is satisfied that:
•There may be an imminent removal or destruction of relevant material likely to be found on
the premises;
•If SARS applies for a search warrant, a search warrant will be issued; and
•The delay in obtaining a warrant will defeat the object of the search and seizure.
• Power is a very narrow exception to requirement that searches & seizures occur pursuant
to warrant
• Does not apply to private dwelling except for part used for trade
or if occupant consents
• Courts have held that there are instances where warrantless search and seizure may be
justified
45
CHAPTER 5: SEARCH & SEIZURE WITHOUT WARRANT (2)
• This power is consistent with that found in more than 15 other
pieces of legislation in South Africa
• SA organs of state / officials with similar powers: Competition
Tribunal; fire protection officers; forest officers; FSB;
immigration officers; SAPS
• OECD tax authorities with similar or greater powers:
•Tax authorities with warrantless search & seizure powers: Austria; Belgium; Chile;
Czech Republic; Denmark; Greece; Hungary; Iceland; Ireland; New Zealand; Norway;
Poland; Portugal; Slovenia
•Tax authorities that may enter business premises & private dwellings without a
warrant: Australia; Canada; Finland; Turkey
46
CHAPTER 5: Taxpayers’ new rights & obligations
• SARS official must demonstrate authority to conduct audit
• Prior notice of field audit at least 10 business days before audit
• Taxpayers obliged to give SARS reasonable assistance during
field audits & search and seizure
• Report on the progress of on going audit
• Notification of conclusion of audit that revealed no adjustments
• Taxpayer entitled to audit findings letter & respond in writing
before assessment if audit revealed material adjustments
• Search & seizure:
• In conduct of search SARS must have strict regard to decency and order
• Taxpayer entitled to inventory of seized material
• SARS may remove copies and not originals where possible
• Taxpayer may claim for unjustified physical damage caused during search
• Protection of material if legal professional privilege asserted
47
CHAPTER 5: LEGAL PROFESSIONAL PRIVILEGE (LPP)
• LPP is a legal principle that certain information shared between
client and lawyer may not be disclosed without client’s consent
• TAA recognises LPP but does not extend it to non-lawyers
• Inherent differences between professions, including lawyers’
oversight by and duty to Courts
• Internationally:
• Australia regulates tax practitioners but does not extend privilege to non-lawyers
(currently under discussion)
• Canada does not regulate tax practitioners or extend privilege to non-lawyers
• New Zealand does not regulate tax practitioners but extends limited privilege to
non-lawyers
• UK does not regulate tax practitioners and Court of Appeal confirmed in the
Prudential case that privilege is not extended to non-lawyers stating; “Parliament's
failure to change the law in this respect is not an accident” (case is on appeal)
• USA regulates tax practitioners and extends limited privilege
to non-lawyers, BUT see Kovell case extended to third parties under attorney
48
CHAPTER 6: CONFIDENTIALITY (1)
• Rationale for tax secrecy:
•Constitutional rationale: protects taxpayer’s right to privacy
•Tax policy rationale: to encourage taxpayers to make full & voluntary disclosure of
all relevant information for purposes of assessing tax liability
• In TAA secrecy & confidentiality provisions are:
•Aligned across taxes
•More explicit as to who is subject thereto
•Extended to include SARS confidential information
49
CHAPTER 6: CONFIDENTIALITY (2)
• General prohibition of disclosure:
•Secrecy specifically applicable to C:SARS & former or current SARS employee or person
contracted by SARS
•SARS employees and persons contracted by SARS obliged to take oath of secrecy before
commencing duties
•Information unlawfully disclosed may not be further disclosed or published, including by the
media
•C:SARS may personally disclose information to counter / rebut false allegations in media in
very narrow circumstances
• SARS confidential information
•Includes, for example, confidential information such as internal policies, privileged legal
opinions, informant information & information that could prejudice the economic interests or
financial welfare of the Republic
•Disclosure regulated > only permitted if public information, authorised by C:SARS, access has
been granted under PAIA or by order of a High Court
•Unauthorised disclosure criminalised
50
CHAPTER 6: CONFIDENTIALITY (3)
• The current secrecy and disclosure proposals seek to
balance the rationale for tax secrecy with information needs
of government to meet law enforcement & integrity provisions
• Disclosure justified where the public benefit/interest
outweighs concerns about individuals’ right to privacy
• Disclosure of information subject to secrecy:
•In the course of performance of duties under a tax Act
•By High Court & criteria to consider prescribed
•Aspects where disclosure is clarified or widened:
• Information needed to enable third party to provide information to SARS
• Verification of basic non-financial information
• Financial regulatory agencies
51
AUDITS
• Sections 40 to 74
• Sections 234 to 238 criminal matters
• Serious tax offence
52
AUDITS CONTINUED
•
•
•
s40 SARS may select a person for inspection, verification or audit on the
basis of any consideration relevant for the proper administration of a tax
Act, including on a random or a risk assessment basis
s41(3) If the official does not produce the authorisation as required under
subsection (2), a member of the public is entitled to assume that the person
is not a SARS official so authorised
s42 (1) A SARS official involved in or responsible for an audit under this
Part must, in the form and in the manner as may be prescribed by the
Commissioner by public notice, provide the taxpayer with a report indicating
the stage of completion of the audit
53
AUDITS CONTINUED
•
S42(2) Upon conclusion of the audit…provide the taxpayer with a document
containing the outcome of the audit, including the grounds for the proposed
assessment or decision referred to in section 104(2); (3) Upon receipt of the
document described in subsection (2)(b), the taxpayer must within 21
business days of delivery of the document, or the further period requested
by the taxpayer that may be allowed by SARS based on the complexities of
the audit, 15 respond in writing to the facts and conclusions set out in the
document; (4) The taxpayer may waive the right to receive the
document – DON’T!
54
AUDITS CONTINUED
•
•
s43(2) Any relevant material gathered during an audit after the referral,
must be kept separate from the criminal investigation and may not be used
in any criminal proceedings instituted in respect of the offence
s44 (1) During a criminal investigation, SARS must apply the information
gathering powers in terms of this Chapter with due recognition of the
taxpayer’s constitutional rights as a suspect in a criminal investigation
55
AUDITS CONTINUED
•
•
Production of “relevant material”- s46(1) SARS may, for the purposes of
the administration of a tax Act in relation to a taxpayer, whether identified by
name or otherwise objectively identifiable, require the taxpayer or another
person to, within a reasonable period, submit relevant material (whether
orally or in writing) that SARS requires – expand on ss 46 to 49
“Relevant material” - means any information, document or thing that is
forseeably relevant for tax risk assessment, assessing tax, collecting tax,
showing non-compliance with an obligation under a tax Act or showing that
a tax offence was committed;
56
AUDITS CONTINUED
•
•
•
s49(2) No person may without just cause— (a)obstruct a SARS official
from carrying out the audit or investigation; or (b)refuse to give the access
or assistance as may be required under subsection (1).
s50(1) Conduct an inquiry for the purposes of the administration of a tax
Act
s50(2) A judge may, on application made ex parte by the Commissioner or
a senior SARS official grant an order in terms of which a person described
in section 51(3) is designated to act as presiding officer at the inquiry
contemplated in this section – NB conflict example!
57
AUDITS CONTINUED
•
•
•
s51 reasonable grounds to believe that— (a) a person has - (i) failed to
comply with an obligation imposed under a tax Act; or(ii)
committed a tax
offence; and (b) relevant material is likely to be revealed during the inquiry
which may provide proof of the failure to comply or of the commission of the
offence – Ferreira v Levin 1996 1 BCLR ! (CC) & R v Jarvis [2002] 3
S.C.R. 757, 2002 SCC 73 ?
s57(2) Incriminating evidence obtained under this section is not admissible
in criminal proceedings against the person giving the evidence, unless the
proceedings relate to—(a) the administering or taking of an oath or the
administering or making of a solemn declaration; (b) the giving of false
evidence or the making of a false statement; or (c) the failure to answer
questions lawfully put to the person, fully and satisfactorily
Similar provisions for search & seizure warrants
58
AUDITS CONTINUED
•
•
Breaching secrecy – s67(5) The Commissioner may, for purposes of
protecting the integrity and reputation of SARS as an organisation and after
giving the taxpayer at least 24 hours’ notice, disclose taxpayer information
to the extent necessary to counter or rebut false allegations or information
disclosed by the taxpayer, the taxpayer’s duly authorised representative or
other person acting under the instructions of the taxpayer and published in
the media or in any other manner
However – s68(1)(e) information related to the operations of SARS,
including an opinion, advice, report, recommendation or an account of a
consultation, discussion or deliberation that has occurred, if— (i) the
information was given, obtained or prepared by or for SARS for the purpose
of assisting to formulate a policy or take a decision in the exercise of a
power or performance of a duty conferred or imposed by law
59
AUDITS CONTINUED
• Self-incrimination s 72 An admission by the taxpayer of the
commission of an offence under a tax Act— (a) contained in a
return, application, or other document submitted to SARS by a
taxpayer; or (b) obtained from a taxpayer under Chapter 5, is XXX
admissible in criminal proceedings against the taxpayer, unless
a competent court directs otherwise
• THERE IS A MISTAKE YOUR PRINTED NOTES
60
CHAPTER 7: ADVANCE RULINGS
• The advance ruling system currently regulated in the Income
Tax Act and the VAT Act now incorporated in the TAB
• TAB provisions establish framework for the system and set out
basic rules regarding:
•
•
•
•
•
•
Application process & fees
Exclusions and refusals
Effect of rulings
Impact of subsequent law changes
Retrospectivity
Publication of rulings
• Provisions also provide for specific rules in respect of:
•
•
•
Binding general rulings
Binding private rulings
Binding class rulings
61
CHAPTER 8: ASSESSMENT
• New provisions:
•Original assessment: Defined term that includes 1st assessment by SARS & return which
incorporates the taxpayer’s determination of the amount of a tax liability
•Additional assessment: New simplified grounds on which additional assessments may be
issued to achieve alignment across taxes
•Reduced assessment: Clarity that reduced assessment will also be issued if taxpayer made
undisputed errors in return
•Jeopardy assessment: May be issued before end of tax period to secure early collection of
tax at risk e.g. in case of dissipation
•Estimation of assessment: Concept of ‘estimated assessment’ replaced with provision that
original, additional, reduced or jeopardy assessment may be ‘based on an estimation’
•Notice of assessment: If contrary to return must include grounds
•Period of limitations for issuance of assessment: Normal assessment 3 years & selfassessment 5 years
•Finality of assessment: Consolidated
62
CHAPTER 9: DISPUTE RESOLUTION
• New provisions:
•Burden of proof: Aligned & SARS bears burden in case of assessment based on jeopardy
and estimation & additional tax re: understatement
•Decision on objection: If disallowed must include grounds
•Decision of Tax Board: Time period within which decision must be given prescribed – 60
business days
•Conflict of interest: Chairperson of Tax Board / Member of Tax Court must withdraw in
case of conflict that may give rise to bias
•Sittings of Tax Court: Generally not public, but Court has a discretion to order sitting to be
public on application by any person & if exceptional circumstances exist
•Order for costs in favour of SARS : Constitutes funds of SARS
•Publication of Tax Court judgments: All must be published to ensure not only SARS has
benefit of unreported judgments
•Settlement of dispute: Only possible if dispute arises after issue of assessment
•New Test Case provision
63
DISPUTES
• Section 12 right of appearance
• Sections 101 to 150
64
DISPUTES CONTINUED
•
Burden of proof s 102 (1) A taxpayer bears the burden of proving— (a)
that an amount, transaction, event or item is exempt or otherwise not
taxable; (b) that an amount or item is deductible or may be set-off; (c)
the rate of tax applicable to a transaction, event, item or class of
taxpayer; (d) that an amount qualifies as a reduction of tax payable; (e) that
a valuation is correct; or (f) whether a ‘decision’ that is subject to objection
and appeal under a tax Act, is incorrect. (2) The burden of proving whether
an estimate under section 95 is reasonable or the facts on which SARS
based the imposition of an understatement penalty under Chapter 16, is
upon SARS.
65
DISPUTES CONTINUED
•
•
•
Forum for dispute of assessment or decision s 105 A taxpayer may not
dispute an assessment or ‘decision’ as described in section 104 in any
court or other proceedings, except in proceedings under this Chapter or by
application to the High Court for review.
Usual objection & appeal balanced against High court proceedings on
procedural issues
Settlement of disputes s 142 - In this Part, unless the context indicates
otherwise, the following terms, if in single quotation marks, have the
following meanings:
66
DISPUTES CONTINUED
•
‘dispute’ means a disagreement on the interpretation of either the relevant
facts involved or the law applicable thereto, or of both the facts and the law,
which arises pursuant to the issue of an assessment or the making of a
‘decision’; and ‘settle’ means, after the lodging of an appeal under this
Chapter, to resolve a ‘dispute’ by compromising a disputed liability,
otherwise than by way of either SARS or the person concerned accepting
the other party’s interpretation of the facts or the law applicable to those
facts or of both the facts and the law, and ‘settlement’ must be construed
accordingly.
67
DISPUTES CONTINUED
•
Purpose of part s 143 - (1) A basic principle in tax law is that it is the duty
of SARS to assess and collect tax according to the laws enacted by
Parliament and not to forgo a tax which is properly chargeable and payable.
(2) Circumstances may require that the strictness and rigidity of this
basic principle be tempered, if such flexibility is to the best advantage of
the State. (3) The purpose of this Part is to prescribe the circumstances in
which it is appropriate for SARS to temper the basic principle and ‘settle’ a
‘dispute’ – Glenister v RSA CCT 48/10 [2011]
68
CHAPTER 10: TAX LIABILITY & PAYMENT (1)
• New provisions:
•Categories of persons liable to tax: To simplify & clarify which persons are liable to tax and in which
capacity. Taxpayers:
• Persons (primary) chargeable to tax
• Representative taxpayers
• Withholding agents
• Responsible third parties
• Person who is the subject of a request to provide assistance under DTA
•Security:
• SARS may require security to safeguard collection of tax e.g. in case of
withholding agent who repeatedly failed to withhold / pay tax due
• Security may also be required from any or all of members, shareholders or
trustees who controls / manage the taxpayer
•Preservation of assets order:
• Common law remedy codified in TAA for tax administrative purposes
• Order by High Court & SARS may seize assets in anticipation of order
• Power available as conservancy measure for purposes of
mutual assistance in the recovery of tax on behalf of foreign governments
69
CHAPTER 10: TAX LIABILITY & PAYMENT (2)
• New provisions:
•Pay now argue later: Rule that dispute (objection & appeal) does not automatically suspend
obligation to pay clarified in Taxation Laws Second Amendment Act, 18 of 2009. TAA additionally
provides that:
• Collection steps by SARS are prohibited during consideration of suspension
request and 10 days after revocation notice, except in narrow circumstances
• Leave of Court is required for institution of sequestration or liquidation if disputed
tax is not paid and did not get a suspension of payment obligation
•Taxpayer account & allocation of payment: TAA creates
• Framework for single taxpayer account with rolling balance
• Framework for “first in first out” payment allocation rule i.e. payment may be
applied to oldest debt first despite taxpayer designation
•Instalment payment agreement: Administrative debt relief mechanism now included in law
70
71
TAX LIABILITY & PAYMENT
•
Liability of representative taxpayer s154(1) A representative taxpayer is,
as regards— (a) the income to which the representative taxpayer is
entitled;(b) moneys to which the representative taxpayer is entitled or has
the management or control; (c) transactions concluded by the
representative taxpayer; and (d) anything else done by the representative
taxpayer, in such capacity - (i) subject to the duties, responsibilities and
liabilities of the taxpayer represented; (ii) entitled to any abatement,
deduction, exemption, right to set off a loss, and other items that could be
claimed by the person represented; and (iii) liable for the amount of tax
specified by a tax Act. (2) A representative taxpayer may be assessed in
respect of any tax under sub- section (1), but such assessment is regarded
as made upon the representative taxpayer in such capacity only.
72
TAX LIABILITY & PAYMENT CONTINUED
•
Personal liability of representative taxpayer s155 A representative
taxpayer is personally liable for tax payable in the representative taxpayer’s
representative capacity, if, while it remains unpaid— (a) the representative
taxpayer alienates, charges or disposes of amounts in respect of which the
tax is chargeable; or (b) the representative taxpayer disposes of or parts
with funds or moneys, which are in the representative taxpayer’s
possession or come to the representative taxpayer after the tax is payable,
if the tax could legally have been paid from or out of the funds or moneys.
73
TAX LIABILITY & PAYMENT CONTINUED
•
Payment of tax pending objection or appeal s164 (1) Unless a senior
SARS official otherwise directs in terms of subsection (3)— (a) the
obligation to pay tax chargeable under a tax Act; and (b) the right of SARS
to receive and recover tax chargeable under a tax Act, will not be
suspended by an objection or appeal or pending the decision of a court of
law pursuant to an appeal under section 133. (2) A taxpayer may request a
senior SARS official to suspend the payment of any tax or a portion thereof
due under an assessment if the taxpayer intends to dispute or disputes the
liability to pay that tax under Chapter 9. (3) A senior SARS official may
suspend payment of the disputed tax having regard to—
74
TAX LIABILITY & PAYMENT CONTINUED
•
•
•
•
•
•
the compliance history of the taxpayer;
the amount of tax involved; the risk of dissipation of assets by the taxpayer
concerned during the period of suspension;
whether the taxpayer is able to provide adequate security for the payment of
the amount involved;
whether payment of the amount involved would result in irreparable
financial hardship to the taxpayer;
whether sequestration or liquidation proceedings are imminent; whether
fraud is involved in the origin of the dispute; or
whether the taxpayer has failed to furnish any information requested under
this Act for purposes of a decision under this section.
75
TAX LIABILITY & PAYMENT CONTINUED
•
•
•
•
•
(4) If the payment of tax which the taxpayer intended to dispute was
suspended under subsection (3) and subsequently—
no objection is lodged;
an objection is disallowed and no appeal is lodged; or
an appeal to the Tax Board or Court is unsuccessful and no further appeal
is noted,
the suspension is revoked with immediate effect from the date of the expiry
of the relevant prescribed time period or any extension of the relevant time
period under this Act.
76
TAX LIABILITY & PAYMENT CONTINUED
•
(5) A senior SARS official may deny a request in terms of subsection (2) or revoke a
decision to suspend payment in terms of that subsection with immediate effect if
satisfied that—(a) after the lodging of the objection or appeal, the objection or appeal
is frivolous or vexatious; (b) the taxpayer is employing dilatory tactics in conducting
the objection or appeal; (c) on further consideration of the factors contemplated in
subsection (3), the suspension should not have been given; or (d) there is a material
change in any of the factors described in subsection (3), upon which the decision to
suspend the amount involved was based. (6) During the period commencing on the
day that— (a) SARS receives a request for suspension under subsection (2); or (b)a
suspension is revoked under subsection (5), and ending 10 business days after
notice of SARS’ decision or revocation has been issued to the taxpayer, no recovery
proceedings may be taken unless SARS has a reasonable belief that there is a risk of
dissipation of assets by the person concerned. (7) If an assessment or a decision
referred to in section 104(2) is altered in accordance with—
77
TAX LIABILITY & PAYMENT CONTINUED
•
•
•
an objection or appeal; a decision of a court of law pursuant to an appeal
under section 133; or
a decision by SARS to concede the appeal to the tax board or the tax court
or other court of law,a due adjustment must be made, amounts paid in
excess refunded with interest at the prescribed rate, the interest being
calculated from the date that excess was received by SARS to the date the
refunded tax is paid, and amounts short-paid are recoverable with interest
calculated as provided in section 187(1).
(8) The provisions of section 191 apply with the necessary changes in
respect of any amount refundable and any interest payable by SARS under
this section.
78
CHAPTER 11: RECOVERY OF TAX
• SARS’ collection powers have been strengthened:
•In respect of repatriation of offshore assets to satisfy tax debts
•In respect of personal liability of third parties who:
• Assist in dissipation of assets
• Receive property from tax debtor for below fair market value
• Benefit from ‘asset stripping’ of tax debtor e.g. shareholders
• Part with / dispose of the assets or money of a tax debtor contrary to a notice by
SARS to transfer the assets or money to SARS
• Period of limitation on collection of outstanding tax debts
•Current 30 year prescription period for tax reduced to 15 years
•Benefits SARS: more practical approach to debt management
•Benefits taxpayer: Finality achieved within more reasonable period
• Appointment of third party to satisfy tax debts
•Person required to transfer money held, including pension or remuneration,owed to tax
debtor
•SARS may revise notice to enable taxpayer to pay basic living expenses including those of
dependants
79
RECOVERY OF TAX
•
•
Liability of shareholders for tax debts s181 (1) This section applies
where a company is wound up other than by means of an involuntary
liquidation without having satisfied its tax debt, including its liability as a
responsible third party, withholding agent, or a representative taxpayer,
employer or vendor.
(2) The persons who are shareholders of the company within one year prior
to its winding up are jointly and severally liable to pay the unpaid tax to the
extent that—
80
RECOVERY OF TAX CONTINUED
•
•
•
•
(a) they receive assets of the company in their capacity as shareholders
within one year prior to its winding-up; and
(b) the tax debt existed at the time of the receipt of the assets or would have
existed had the company complied with its obligations under a tax Act.
(3) The liability of the shareholders is secondary to the liability of the
company.
(4) Persons who are liable for tax of a company under this section may avail
themselves of any rights against SARS as would have been available to the
company.
81
RECOVERY OF TAX CONTINUED
•
•
(5) This section does not apply— (a) in respect of a ‘‘listed company’’
within the meaning of the Income Tax Act;
or (b) in respect of a shareholder of a company referred to in paragraph (a).
82
CHAPTER 12: INTEREST
• TAA creates framework for:
•Alignment of interest provisions across taxes
•Compounded interest
• General rule:
•Interest accrues from ‘effective date’, i.e. normally the date that tax is payable under a tax Act,
to date of payment
•Interest rate is the ‘prescribed interest rate’ except in respect of overpayments of provisional
tax (4% points below)
•Remittance of interest discretion retained - limited to specified circumstances beyond the
taxpayer’s control
• Refund interest payable by SARS:
•Interest calculated from the later of the ‘effective date’ or date that theexcess payment
received by SARS
•Taxpayer thus normally entitled to refund interest from same date that SARS would have been
entitled to interest on unpaid tax
•Some exceptions in tax Act e.g. VAT Act where interest on refund only payable after 21 days of
claim
83
INTEREST
•
•
•
•
•
187. (1) If a tax debt or refund payable by SARS is not paid in full by the
effective date, interest accrues on the amount of the outstanding balance of
the tax debt or refund—
(a) at the rate provided under section 189; and
(b) for the period provided under section 188.
(4) The effective date in relation to an additional assessment or reduced
assessment is the effective date in relation to the tax payable under the
original assessment.
(5) If a senior SARS official is satisfied that interest payable by a taxpayer
under subsection (1) is payable as a result of circumstances beyond the
taxpayer’s control, the official may, unless prohibited by a tax Act, direct
that so much of the interest as is attributable to the circumstances is not
payable by the taxpayer.
84
CHAPTER 13: REFUNDS
• New provisions:
•Refund paid into a wrong account by SARS may be collected as if it is tax> otherwise SARS
only able to recover amount through protracted common law remedies such as enrichment
•A refund need not be authorised by SARS until such time that a verification, inspection or
audit of the refund has been finalised
• SARS issues assessments on expedited basis, so issue of assessment reflecting
refund amount does not mean payment is authorised
• Most taxpayers will get refunds shortly after assessment but some may be
selected for audit
• Refund need not be paid during audit but must be paid if security is given
• Taxpayer will remain entitled to interest from the later of ‘effective date’ / date that
the overpayment was made, to date of payment of the refund by SARS
• Set-off of refunds against existing tax debts prohibited in the case of
instalment payment agreements & suspended disputed tax
• Limitation of payment of refunds if taxpayer has outstanding
returns limited to income tax & VAT
85
REFUNDS
•
•
•
s190(2) SARS need not authorise a refund as referred to in subsection (1)
until such time that a verification, inspection or audit of the refund in
accordance with Chapter 5 has been finalised.
(3) SARS must authorise the payment of a refund before the finalisation of
the verification, inspection or audit referred to in subsection (2) if security in
a form acceptable to a senior SARS official is provided by the taxpayer.
(4) A person is entitled to a refund under subsection (1)(b) only if the refund
is 15 claimed by the person within three years, in the case of an
assessment by SARS, or five years, in the case of self-assessment, from
the date of the assessment.
86
CHAPTER 14: WRITE OFF / WAIVER OF TAX DEBTS
• Provisions are essentially:
•
•
A form of tax debt relief
May be afforded to taxpayers under certain prescribed circumstances
• No major changes were made to current law, except:
Circumstances where it is appropriate to compromise a tax debt were made less
restrictive
• Some of the factors that disqualify the tax debtor from a compromise agreement
removed from current law include:
•
• Compromise based solely on a claim of hardship in paying the tax debt,
including the need to sell a home or business
• Compromise to assist a debtor who has become overcommitted
• Compromise to save a business from failure or closure
• Compromise to alleviate harsh or unfair operation of a tax law in particular
circumstances
87
CHAPTER 15: PENALTIES
• The administrative penalties imposed under the Income Tax Act
now included in TAA & apply across taxes
• These penalties target non-compliance with administrative
obligation under a tax Act
• New provisions:
•Imposition of penalty mandatory (currently discretionary) > per international models as certainty
of penalty enhances compliance
• Targeted non-compliance will be listed in public notice by C:SARS > in order to only target
impactful / more serious non-compliance
• Percentage based penalties imposed in TAB but % of penalty (e.g. 10%)determined by
relevant tax Act
• Administrative penalty for failure to report a reportable arrangement > included in this Chapter
& imposed on a more proportionate basis
88
CHAPTER 16: UNDERSTATEMENT PENALTY
• The current open-ended discretion to impose additional tax
(understatement penalty under TAA) up to 200% now limited by
new structure whereby percentage of additional tax will be
determined by :
•
•
Taxpayer’s behaviour (e.g. gross negligence), and
Other objective criteria (e.g. voluntary disclosure) in a Table
• New provisions:
Imposition triggered by an ‘understatement’ (defined term)
• If understatement is ‘substantial’ (defined) behaviour irrelevant
• Methodology for calculation of tax shortfall prescribed
• Onus to prove grounds for alleged behaviour on SARS
• Administrative & understatement penalty ‘double jeopardy’ avoided
• Permanent ‘Voluntary Disclosure Programme’ > administrative penalty, understatement
penalty & criminal charges relief but not interest
•
89
CHAPTER 17: CRIMINAL OFFENCES (1)
• General statutory offences now included in TAA but tax type
specific offences may remain in the other tax Acts, and include:
•
•
•
•
Non-compliance offences
Tax evasion
Contravention of secrecy provisions
Filing returns without authority
• New provisions:
•Tax evasion “reverse onus”:
• Reverse onus on taxpayer under current law has been removed
• Replaced with ‘evidentiary burden’ i.e. taxpayer needs to prove that there is a
reasonable possibility that he / she was ignorant of the falsity of fraudulent statement & ignorance
was not due to negligence
•Decision to lay a complaint of statutory tax evasion: May only be taken by a senior SARS
official
90
CHAPTER 18: UNPROFESSIONAL CONDUCT
• No major changes to current law except one additional
requirement to be registered as a tax practitioner
• A person may not be registered as a tax practitioner if during
the five years before his or her application for registration he or she has:
•Been removed from a related profession or professional body for dishonesty, or
•Been convicted of:
• theft,
fraud, forgery or uttering a forged document, perjury or statutory
offence of corrupt activities, or
• any other crime involving dishonesty
with a sentence of two years’ imprisonment or equivalent fine
91
CHAPTER 19: GENERAL PROVISIONS
• Provisions are predominantly based on current law, and
provides for:
•Deadlines for payments, submission and other action
•Power of Commissioner to determine date for submission of returns and payment of tax,
interest and penalties
•Appointment of public officers & default in appointment
•Address, authentication and delivery of documents
•Electronic communication rules (to be issued in regulations)
•New provision which caters for non-material defects in procedural requirements for the issue
of documents > defects do not affect the validity of procedure provided taxpayer has effective
knowledge of the notice / and of its content
• The procedures and the requirements for the issue of a tax
clearance certificate are now regulated in the TAA
under this Chapter
92
CHAPTER 20: TRANSITIONAL PROVISIONS
• Provisions aimed at ensuring a smooth transition from
current law to the Tax Administration Act, upon
commencement
• Essential rule followed:
•Deleted provisions only apply until TAA commencement date
•Thereafter TAA applies (i.e. including ongoing audits, investigations, disputes &
debt recovery) – idea is to avoid ‘two systems’ going forward
•Exception: Criminal Prosecutions
93
SCHEDULE 1 TO TAA (1)
• Most administrative provisions removed from the various tax
Acts and now housed in the TAA
• Provisions that are unavoidably tax type specific remain in the
various tax Acts
• In some cases specific tax Act requirements apply in addition to
TAA requirements e.g. VAT returns
• Some substantive changes also proposed
94
SCHEDULE 1 TO TAA (2)
• Amendments to paragraph 19 of Fourth Schedule:
•Estimates of taxable income (IRP6s) need only be submitted when required by the
Commissioner (e.g. when an amount of provisional tax is payable)
•In the case of a first provisional tax payment the basic amount will not be increased
by 8 per cent p.a. if an assessment has been raised for a year of assessment
ending within 18 months before payment is due
•An assessment issued by the Commissioner up to 14 days before the date a
provisional tax estimate is made, may be used to determine the basic amount
•Estimates made by the Commissioner in terms of paragraph 19(2) and (3) are no
longer final and conclusive
95
SCHEDULE 1 TO TAA (3)
• Amendments to section 17 of VAT Act: Proposed
amendment provides that SARS will only approve an alternative
method for the calculation of apportionment of input tax with
regard to current or future tax periods and not past tax periods
• Amendments to section 28 of VAT Act: To achieve a
consistent filing date for VAT but retain the incentive to e-file,
vendors who e-file and make payment via e-filing must submit
returns by 25th (as is the case for others) but need only pay by
month-end
96
•
More Info – www.IITF.org Advanced Diploma In Tax
Procedural Law
•
www.Tax-Radar.net - client funding
•
Prof D N Erasmus – [email protected]
•
www.ErasmusOnTax.com
•
083 458 8422
•
I start with a quick overview of the Tax Administration
Act
97
QUESTIONS
•
•
•
•
Address questions to:
Prof D N Erasmus [[email protected]]
083 458 8422
www.ErasmusOnTax.com
98
Thank You
99

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