The Tax Administration Act (Act 28 of 2011) took effect from 1 October, apart from certain provisions relating to interest which will take effect from a date still to be determined.
Ilsa Groenewald, associate director , tax at BDO Durban, says according to the South African Revenue Services (SARS) Short Guide to the Tax Administration Act, the Act aims to simplify and consolidate, into one Act, a more logical and systematic way of dealing with the tax administration law.
Ilsa Groenewald, associate director, tax at BDO Durban, says according to the South African Revenue Services (SARS) Short Guide to the Tax Administration Act, the Act aims to simplify and consolidate, into one Act, a more logical and systematic way of dealing with the tax administration law.
"It eliminates duplication, removes redundant requirements and aligns different requirements that currently exist in different tax Acts”.
The concept of a single tax Act dealing with administration was first mooted by the Minister of Finance in the 2005 Budget review and has taken a long time to implement.
It introduces a number of changes to the way in which tax Acts are administered, she says.
These include the following:
1. The principle that certain administrative functions may only be performed by a senior SARS official.
These include the right to authorise a search and seizure without a warrant and the right to suspend the payment of tax in dispute pending the outcome of an objection or an appeal.
2. The appointment of a Tax Ombud to address administrative difficulties encountered by taxpayers
3. A single tax registration number for all tax types
4. Increased information gathering powers, which are afforded to SARS in terms of the Act.
These include the right to ask a taxpayer to attend an interview at a SARS branch office, the ability to conduct audits on a random or risk assessment basis and the ability to arrive at business premises without prior notice to conduct an inspection
5. A permanent Voluntary Disclosure Programme (VDP) which is, however, not as favourable to the taxpayer as the VDP that expired in October 2011
6. A new regime for the regulation of Tax Practitioners, which will require such practitioners to be members of a recognised controlling body
7. A new penalty regime which consists of fixed amount penalties (for incidents of administrative non-compliance listed by the Commissioner by public notice) and percentage based penalties (for understatement of a tax liability).
The quantum of the fixed amount penalties depends on the taxable income of the taxpayer in the preceding tax year and ranges between R250 and R16 000.
She says the quantum is increased automatically by the same amount for each month, or part thereof, that if the person fails to remedy the non-compliance within one month after the date of the delivery by SARS of a ‘penalty assessment’.
Groenewald says the only act of administrative non-compliance listed by public notice to date is failure by a natural person to submit an income tax return as and when required for years of assessment commencing on or after 1 March 2006 where that natural person has two or more income tax returns outstanding.
The percentage based penalties range between 5 percent and 200 percent of the amount of tax underestimated, depending on the type of behaviour and the degree of culpability involved.
In view of the wide ranging powers afforded to SARS in terms of the Act and the consequences of non-compliance, it is clear that vigilance on the part of the taxpayer and advisors is called for, she adds.