More Regulation For Tax Advisers
12 November 2012
Posted by: Nina Keyser, Toinette Beckert and Charmaine Louw
More Regulation For Tax Advisers
The role of tax practitioners and other intermediaries is set to change as a result of the new Tax Administration Act, No. 28 of 2011 (TAA) coming into force on 1 October 2012, and the Draft Amendment Bill 2012 (Draft Amendment Bill)published for comment on 5 July 2012.
Consulting a registered tax practitioner offers a substantial potential benefit to taxpayers in that it may allow them to qualify for remittances.In addition, a taxpayer in receipt of an opinion from a registered tax practitioner is more likely to receive a reduction in penalties imposed by the South African Revenue Services (SARS). With such importance being placed on the opinions of tax practitioners and advisers, there is a strong need to regulate their activities and the industry as a whole.
The TAA requires people providing tax advice or completing SARS documents on behalf of clients to ensure that they comply with its registration requirements. Its provisions are to a large extent the same as those in the Income Tax Act, No. 58 of 1972 (ITA). Section67A of the ITA states that every natural person who provides advice in respect of the application of any tax legislation, or who completes or assists in completing any document to be submitted to SARS,must register with SARS as a tax practitioner within 30 days after first providing advice or completing any SARS document. The Draft Amendment Bill also proposes to reduce the registration period to 21 days and provides that a registered tax practitioner must be registered with both SARS and a controlling body. Tax practitioners not currently registered with a controlling body must register with one prior to being a registered tax practitioner.
The same exemptions from registration as is currently the case under the ITA will apply. These exemptions include the following persons:
•Those persons who are removed from a related profession during the preceding five years.
•Those persons who have been convicted of theft, fraud, forgery or any other offence involving dishonesty and for which he or she has been sentenced to a period of imprisonment exceeding two years without the option of a fine, or to a fine exceeding the amount prescribed in the Adjustment of Fines Act, No. 101 of 1991.
Failure to register as a tax practitioner is an offence and a person may be liable on conviction to a fine or to imprisonment for a period not exceeding two years. A controlling body will include bodies established voluntarily or under law, with the power to take disciplinary action against a person who contravenes the rules or code of conduct of that profession.
These bodies may, in terms of the Draft Amendment Bill, include the Independent Regulatory Board for Auditors, the South African Legal Practice Council (if and when this body is formed) or any other similar statutory body as published in the Government Gazette by the Minister of Finance.
The Draft Amendment Bill proposes that the controlling bodies must maintain minimum qualification and experience requirements; continuing professional education requirements;codes of ethics and conduct; and disciplinary codes and procedures.
They will also be required to have at least 1 000 members or the reasonable prospect of 1 000 members when applying for recognition with SARS. A senior SARS official may lodge a complaint with a controlling body regarding a registered tax practitioner or a person who carries on a profession governed by the controlling body. These complaints could:
• Relate to anything that, in the opinion of the senior SARS official,was intended to assist, or by reason of negligence caused, the taxpayer to avoid or unduly postpone the performance of an obligation imposed under tax legislation; or
• Include a contravention of a rule or code of conduct that may result in a controlling body taking disciplinary action against a registered tax practitioner.
The Draft Amendment Bill proposes further grounds for a complaint, including:
• Not exercising due diligence in preparing or submitting documentation to SARS.
• unreasonably delaying the finalisation of any matter before SARS.
• Acting with gross incompetence.
• Being grossly negligent with regard to any work performed as a registered tax practitioner.
• Knowingly providing false or misleading information on matters relating to the application of any tax act.
• Attempting to influence any SARS employee.
Tax practitioners will need to ensure they comply with all registration requirements and carefully consider the extent of the duty on them, particularly when issuing opinions.
Controlling bodies currently regulating practitioners, voluntary or statutory, in the broader tax, legal and accounting professions are SAIT,LSSA, SAICA and SAIPA.
Source: Nina Keyser, partner; Toinette Beckert, associate; and Charmaine Louw, candidate attorney,Webber Wentzel (TaxTalk)