For next year’s tax season the onus will be on you to ensure that your tax practitioner is registered and qualified to file your tax return on your behalf. When the season starts in July 2013, it will be illegal for a tax practitioner to file your tax return without being registered with a professional Body assigned by SAQA.
“The use of a tax practitioner doesn’t absolve you from carrying the can when things go wrong and chances are that if your practitioner’s affairs are not in order, he or she is also not paying proper attention to yours,” said Dirk Kotze, tax partner at Mazars. The main purpose of the regulation of the tax profession is to protect the public against rogue tax practitioners. “Recently the South African Revenue Service (SARS) found that 9.5% of tax practitioners, who assist some four million taxpayers, are not tax-compliant in that they are either not registered with SARS or their own tax affairs are not in order”, said Stiaan Klue, chief executive of the South African institute of Tax Practitioners (SAIT).
Keep SARS happy
Ultimately, it looks like SARS will be keeping a strict eye on tax returns in the future. “The new penalties clearly increase the risk to all taxpayers and no longer just those that sail close to the wind. Even honest taxpayers that merely make errors will now be exposed to potentially severe penalties,” said Kotze.
To mitigate any risks, Kotze recommends that taxpayers take the following precautions:
1. Perform a tax ‘health check’ on past and current tax affairs. Engage tax practitioners to review all aspects of your tax affairs – including income tax, employees’ tax, VAT etc. This may pinpoint certain areas where you’re at risk and indicate whether or not you should consider voluntary disclosure to SARS. Remember that you can’t disclose what you do not know.
2. Pay attention to administration. Proper record keeping and document retention are paramount. It may be necessary to spend time and money replacing current administration systems and staff with proper systems and suitably qualified personnel. Remember, cheap systems in the short term may prove to be expensive in the long term.
3. Seek proper advice before taking a particular tax position. Prevention is better than cure so rather ask the questions before transacting than afterward when things can no longer be undone.
4. Be prepared for an answer that you don’t want to hear. By its nature, tax is not designed to be fair, and SARS is not a paper tiger that sits back passively while taxpayers try to find loopholes. Many loopholes have been closed already, and the new penalty regimes are designed to act as a deterrent to taxpayers who are still trying to take aggressive views. Like so many aspects of life, if the tax position sounds too good to be true, it probably is.
5. Pay what is due, as and when it’s due. Don’t manipulate tax estimates and payments according to what you want the answer to be, or what you feel is fair– do it right. Avoiding an investigation and late payment penalties starts with not understating your tax position.