SARS versus taxpayers rights
by Kamy Reddy and Njabulo Mngomezulu
THE Tax Administration Bill, expected to be promulgated in 2012, aims to improve enforcement of tax legislation by consolidating and simplifying diverse law. In improving tax compliance, it is a move that will ultimately boost revenue collection and level the playing field between the South African Revenue Service (SARS) and the taxpayer.
The bill grants taxpayers increased rights and responsibilities, matched by SARS extensive powers and duties. It establishes a tax ombudsman, while also securing taxpayers the right to be informed on audit progress and to receive notification on the final outcome.
It places the burden of proof on SARS for estimated or jeopardy assessments – where an assessment is issued to secure early tax collection – and replaces the discretionary additional tax system with an understatement penalty system linked to behaviour. Another leg introduces a permanent voluntary disclosure programme. SARS powers include significantly increased information-gathering powers such as procuring third party information or conducting interviews at SARS offices; increased taxpayer obligations to assist with field audits; the power to issue jeopardy assessments; the right to demand taxpayer security for tax that has or may become payable; the power to withhold a refund subject to finalising an audit and prohibiting undesirable persons from registering as tax practitioners.
The bill also creates a single registration number for all taxes; aligns interest provisions across all taxes resulting in interest due or payable calculated on the daily balance owing and compounded monthly and modernises the SARS accounting system. For compliant taxpayers, the bill ensures better service and a lower compliance cost. However, non compliant taxpayers face far stricter enforcement.