The majority of the provisions in the contentious Tax
Administration Act, 28 of 2011 ("TAA")
come into effect from today, with the exception of certain
provisions that relate to interest that will come into effect at a
later date. The TAA empowers the South African Revenue Service
("SARS") with even more far reaching
authority and aims to ensure the effective and efficient collection
of tax by aligning the tax administrative provisions across all tax
acts into a single piece of legislation. Certain administrative
provisions that only apply to a specific tax type will remain in
the tax act that imposes such tax.
Some of the big tax changes that have been introduced in the TAA
include:
- The appointment of a Tax Ombud by the Minister of Finance ("Tax Ombud"), including the determination of the term of office and the remuneration package. The Tax Ombud is mandated to review and address complaints by taxpayers regarding service matters or procedural matters arising from the application of the administrative provisions in the tax acts by SARS. However the Tax Ombud may not review legislation, tax policy, SARS policy or any practice generally prevailing. The Tax Ombud is empowered to only review complaints once the taxpayer has exhausted the available complaints resolution mechanisms in SARS. The independence of the Tax Ombud office is questionable as SARS officials will be seconded to the Tax Ombud and the SARS budget will fund the expenditure requirements.
- A phased approach has been introduced towards a single tax
registration process and tax number across all taxes in order to
reduce red tape and streamline the tax system for easier
administration by the SARS. Previously taxpayers had to register
separately for income tax, PAYE and VAT however from now taxpayers
will be allocated with one tax reference number that will cover all
taxes.
- The information gathering powers of the SARS have been
substantially broadened, in that SARS may select a person for
inspection, verification or audit on the basis of any consideration
they consider relevant for the proper administration of a tax act.
SARS is also empowered to now arrive at a business premises without
prior notice and inspect such premises to determine the identity of
the person occupying the premises, whether the person is conducting
a trade and is registered for tax.
- SARS has the authority to conduct a search of a premises
without a warrant under certain restricted circumstances. This
power may only be invoked if the person affected by the search has
consented or if a senior SARS official on reasonable grounds is
satisfied that there may be imminent removal or destruction of
relevant material.
- SARS may issue a jeopardy assessment prior to the date on which
a return is due, if satisfied that such assessment is required to
secure the collection of tax that would otherwise be in jeopardy.
It is unclear when SARS will view the collection of tax to be in
'jeopardy'.
- A permanent voluntary disclosure programme has been adopted.
Any person may apply for voluntary disclosure relief provided that
such person is not aware of a pending audit or investigation or an
audit or investigation has already commenced into its tax
affairs.
- The legislation sets out the requirements and time frames regarding the issuing of tax clearance certificates and the circumstances when a SARS official may issue a tax clearance certificate.
It will be interesting to see whether the new wide-ranging
powers of the SARS will be able to withstand constitutional
scrutiny in the future.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
