The Tax Administration Bill is an incorporation of generic administrative provisions contained in various pieces of tax legislation; and has been branded as a step towards the re-drafting of the Income Tax Act.

It is an effort by the National Treasury to provide a foundation for the updating and modernisation of tax collection and administration in the South African tax system.

The second draft of the controversial Tax Administration Bill was released for public comment in October 2010 for a second round of comments after having been approved for submission to Parliament at a cabinet meeting of 1 September 2010.

According to the Commissioner, Mr Oupa Magashula, SARS (South African Revenue Service) generally faces two types of disputes. The first relates to problems in the interpretation of the law, in terms of which the normal dispute resolution processes in the form of alternative dispute resolution and appeals to the Tax Board as well as the Tax Court are available. The second type of dispute relates to failures in the administration of tax legislation where the administrative resolution channels that a taxpayer can make use of are the internal service issue resolution, the SARS Service Monitoring Office and the Public Protector before the normal court system is used.

Section 14 of the current Tax Administration Bill gives the Minister of Finance the power to appoint a Tax Ombud as recommended by the Katz Commission. This has been noted by the Commissioner as a bid to create an independent and effective recourse for tax payers. It is seen as a mechanism to address failures in the service delivery system, as the Tax Ombud's main mandate is to review complaints on service, procedural and administrative matters.

However the taxpayer seems to be in for an administrative hurdle as the Tax Ombud is an intermediate step between SARS, the Public Protector and the courts. Before one can consult or seek recourse with the Tax Ombud, the SARS call centre and the SSMO will have to be consulted first. There are preliminary channels that need to be exhausted first before the Tax Ombud can be made use of.

The entire operation is to be funded by SARS whose officials are to make up the staff of the Tax Ombud's office. One only hopes that the Ombudsman will be successful in ensuring that SARS is accountable in its service and treatment of tax payers.

The framework of establishing or creating a South African Tax Ombud is based mainly on the Canadian Taxpayer Ombudsman as well as the UK Revenue Adjudicator.

The first Canadian Ombudsman began serving his three year term in February 2008, as mandated by the Canadian Taxpayer Bill of Rights which is similar to the Taxpayer's Charter that was published by SARS in 1997. One is somewhat forced to wonder if it is not a bit too premature to be mimicking a structure that is still in its infancy stages.

The introduction of a Tax Ombud is a welcome development in the South African Tax system considering that the Tax Administration Bill equips SARS with far reaching powers that could erode the rights of the South African taxpayer. An example is that of SARS' right to carry out search and seizure operations without a search warrant.

It is however questionable how effective and unbiased the Tax Ombud will be considering that the staff of the Tax Ombud is to be seconded from the SARS workforce that arguably would have adopted the approach to the taxpayer as influenced by SARS.

It seems more practical for the Minister to mandate a fresh work force from various other sectors with just as much skills and abilities or even better than the current staff at SARS to run the Tax Ombud division.

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