Regulating Tax Practitioners: A Bind or a Blessing?
01 July 2007
Posted by: TaxFind™
Regulating Tax Practitioners: A Bind or a Blessing?
Most taxpayers find it a nightmare to file their tax returns.This reality has resulted in a surge of tax advisers and consultants offering their services to taxpayers out there. According to SARS’s Budget Tax Proposals 2007/2008, tax practitioners play an important role in the administration of fiscal legislation but bear limited responsibility for the advice and assistance they provide.This is one of the main reasons why regulation has been placed on the agenda.
Regulating tax practitioners has been a long time coming.In his 2002 budget speech Minister of Finance, Trevor Manuel announced that in order to promote better compliance and ensure that taxpayers receive advice consistent with tax legislation, SARS would initiate discussions on the regulation of tax consultants and advisors in South Africa, with appropriate sanctions in the event of non-compliance with tax legislation.A discussion paper titled Regulating Tax Practitioners was released for public comment in November 2002 and comments were received by 28 February of the following year.After considering the feedback refinements to the proposal were made.
Following the discussion paper in 2002 and subsequent consultations with stakeholders, a decision was taken to implement the regulation of tax practitioners in two phases.The first phase involved the registration of tax practitioners with SARS by 30 June 2005.
This phase provided information on existing tax practitioners with facts emerging about their qualifications, experience and membership of existing professional bodies.This first drive towards regulation resulted in more than 17 000 tax practitioners registering with SARS.
For the second phase it was envisaged to establish an independent regulatory board for tax practitioners.Draft legislation for this second phase has been released for public comment and should be tabled later in the year.The draft bill provides for the establishment of an Independent Regulatory Board for Tax Practitioners that will oversee all matters related to practitioners.
At a recent meeting of the South African Institute of Professional Accountants (SAIPA) where Pieter Lombard of SARS and Stiaan Klue of the North-West University spoke, members of the audience had reservations about the role of the regulatory board. Comments were made about the role and status of the board, the danger of over-regulating, qualifications versus experience and more. Lombard assured the audience that the process would be well considered and that it would rather enhance the profession than hinder it.
According to the draft legislation, ten principal members of the board will be appointed by the Minister of Finance from persons nominated by the general public.Only half of the members may be tax practitioners.The minister may appoint officials of the National Treasury as his representatives to the board and an official of SARS as an additional member, without the right to vote.
The board will prescribe the standards of qualifications and experience of tax practitioners, maintain the registration system, implement a code of professional conduct and take disciplinary action where necessary.The board may establish committees to assist with its work and must establish an investigating committee and a disciplinary committee.
In terms of the draft bill, tax practitioners are required to register with the board and failure to register is an offence. Tax practitioners who have already registered in terms of the Income Tax Act, 1962 need not apply for registration with the board, as their information will be provided directly to the board by SARS. Certain tax practitioners are not required to register and this includes clearing agents who are already licensed in terms of the Customs and Excise Act,1964. One of the duties of accredited tax practitioners is to report irregularities in connection with tax and fraud to the board.
Legislation on the table
The draft bill sees an insertion of section 67A in the Income Tax Act of 1962. The proposed section 67A requires all natural persons who provide tax advice or complete or assist in completing any documents for submission to SARS to register with the Commissioner as tax practitioners.
It is, however, proposed that the following persons be excluded from the requirement to register-
·Persons who provide advice or complete documents for no consideration to themselves or their employers (such persons are not providing assistance for reward);
·Advocates and lawyers who provide advice or assist clients during or in anticipation of litigation (it may be argued that without such an exclusion taxpayers cannot freely choose legal representation);
·Persons who provide advice which is incidental to the provision of goods or other services (such as insurance brokers who sell retirement annuities to clients and in the course thereof advise on the tax consequences thereof);
·Employees who provide advice or complete documents of their employers or a connected person in relation to that employer (such as a group tax manager or a payroll supervisor);
·Employees who provide advice or complete documents while under the direct supervision of a tax practitioner (such as trainees or articled clerks of law or accountancy practices); or
·Persons who provide advice or complete documents in terms of the Customs and Excise Act, 1964, (such persons are dealt with in terms of a separate provision in that Act).
Source: By TaxTALK