Top Ten Tips for Tax Practitioners
15 March 2013
Posted by: Author: Joan Hamman Ungerer
Author: Joan Hamman Ungerer
1. Become a specialist in your ﬁeld of tax law
Know the various tax laws and especially all the administrative procedures, oﬀ by heart. This includes the Income Tax Act, the Tax Administration Act, the VAT Act, Estate Duty Act, Insolvency Act and the Companies Act.
Make sure you are up to date regarding matters such as the SARS debt collection tool (a third party appointment). SARS uses this debt collection tool now as the ﬁrst tool. Section 179 of the TAA has replaced the old section 99 of the ITA as well as its equivalent in the VAT Act. Section 179 took eﬀect from 1 October 2012 and deals with the obligations of a third party required by SARS to pay money to it in satisfaction of taxpayer’s tax debt.
SARS objective is still the eﬃcient and eﬀective collection of tax revenue. SARS always believed in the mantra of "pay now, argue later”. The TAA reinforces this principle. Know the signiﬁcant changes of these new sections.
2. Keep up with tax law changes, especially the new TAA
Make sure you keep up with all the tax law changes. Go to seminars. Enroll for short tax courses at various institutions. Subscribe to good business- and tax magazines. Don’t practice in isolation, brainstorm with other professionals. Read news ﬂashes on SARS website. Read SARS guides regarding to new proposed legislation and how SARS interpret these new legislations.
These guides deal generally with the provisions relating to the proposed new legislation. SARS also oﬀers free tax education workshops at most SARS branches across the country by the Branch Operations Engagement team. These workshops cover a wide range of topics and are presented on a regular basis.
Make sure you know the implications of the TAA. The new TAA No 28 of 2011 was promulgated with eﬀect from 1 October 2012, it content extended taxpayers rights, but also reaﬃrmed and extend SARS powers. The new TAA takes all the administrative provisions from all taxes in one phase, that achieves consistency of language. The purpose is to administrate all the administrative actions in one. Be aware of the new powers that SARS obtains from the TAA. Understand the impact of the legislation.
3. Know your deadlines to avoid unnecessary penalties and interest
Make sure you know your deadlines for the submission of tax returns. Plan your diary and your clients carefully to ensure you spend quality time with your clients before submitting any return in time. Remember there are two diﬀerent deadlines for taxpayers who submit their tax return manually, by posting it or dropping it oﬀ in a SARS drop box and another deadline for taxpayers who submit their returns electronically. There are also diﬀerent deadlines for non-provisional taxpayers who submit their returns via eﬁling and provisional taxpayers who submit their returns via eﬁling.
4. Offer tax saving tips for individuals and business
Do tax planning and especially oﬀer estate planning to your clients.
Do tax planning from the start with your client, this way you prevent unnecessary costs to the clients, for example, must a house be registered in a trust, company or in his personal capacity. Take CGT, income tax implications and estate duty in consideration, when making any decisions. Think ahead for your client, he does not have the knowledge, you have!
Weigh up your client tax savings options for example, donate money to relatives each year, isn’t it better to sell shares that incurred losses and then donate the money to relatives instead of just donating the money to relatives. This way you can claim the capital loss on the tax return.
5. Use good tax software
Start investing in good soﬅware. Tax programs aimed at running your tax compliance department eﬃciently. These administration and tax return data normally interacts with SARS eﬁling systems. The strength of any tax management program must be to ensure that various tasks in the tax year are handled eﬀectively and eﬃciently by deadline dates. This prevents penalties for example, if a client pays his VAT or PAYE late, by just one day, then it attracts a 10 per cent penalty. Also keep in mind that this penalty is not tax deductible. Tax programs improve proﬁts and reduce risk for the tax practitioner, by applying tax methodology. Update your soﬅware regularly.
6. Know taxpayers rights
Know taxpayers rights and take action against SARS unlawful actions. Always ensure that you are in possession of a copy of a special power of attorney, signed by the taxpayer, especially when visiting SARS. Always enclose this special power of attorney in your correspondence with SARS. This prevents unnecessary delays when dealing with SARS.
Always ask SARS to provide you with copies of all correspondence exchanged between the taxpayer or its advisors and SARS; a full breakdown of the taxpayer’s account which reﬂects any tax liability owing to SARS; any assessments from which any tax liability emanates; any agency notices served on third parties, such as the taxpayer’s bankers; and any judgments taken against the taxpayer.
One of the new provisions in the TAA, is to protect a taxpayer in the event of an audit. SARS must now advise a taxpayer on the progress and status of an audit conducted. Section 99 of the TAA states that SARS may not issue an assessment, three years aﬅer the date of assessment of an original assessment. However, in the event of fraud, misrepresentation or non-disclosure of material facts by the taxpayer, then the 3 year rule does not apply. SARS must prove that there was such fraud, mispresentation or non-disclosure, and that this fraud etc. resulted in the under-assessment of taxes.
Normally such an audit by SARS leads to the issue of an assessment (or additional assessment) by SARS. Where the audit identiﬁes amounts which SARS wishes to be taxed, then SARS must furnish the taxpayer, with the grounds and reasons for these assessments issued, within 21 business days. A taxpayer has the right to object to an assessment. The objection must now be lodged within 30 days of the date of issue of the assessment. An audit can lead to criminal investigations by SARS. Taxpayer’s rights are still protected where a taxpayer faces a criminal investigation. Te TAA Act requires that audits and criminal investigations are separated, ensuring the rights of the accused under the Constitution Act are protected.
The taxpayer still has the ability to manage its exposure to understatement penalties in terms of the TAA.
When it comes to taxpayers rights, you need to know the provisions of the Promotion of Administrative Justice Act 3 of 2000 and the provisions of the Constitution of the Republic of South Africa.
Tax disputes can oﬅen be resolved at Administrative level without incurring the expense of going to Court. Where an appeal to the courts is unavoidable, then assist with legal counsel for your clients.
7. Know your clients business
Today’s business and tax environment is increasingly complex, there are more demands for transparency and tax practitioners are under pressure to be more eﬀective and highly qualiﬁed.
Supply quarterly and annual tax provision calculations to your client. Identify and prioritise key tax risks and assist with controls monitoring and remediation.
Help clients analyse the speciﬁc facts of their business operations, identify various tax regulations and realise the potential beneﬁts that can be attained.
Identifying tax incentives associated with your clients qualifying research activities and enhanced deductions for research expenses. Help to streamline ﬁxed asset analysis and identify tax deductions.
8. Evaluate all tax planning strategies
Every transaction has tax implications, whether it’s an acquisition, a disposal, reﬁnancing or restructuring. You must understand and plan for these implications to mitigate transaction risks, enhance opportunities and to provide crucial negotiations insight. This can only be done by not taking decisions in ‘isolation’. Take all the various acts into consideration before making any decision.
Evaluate all tax planning strategies in the light of tax rules, the companies act and various other acts, before making any ﬁnal decisions.
Tax planning oﬀerings can help clients improve cash ﬂow, where appropriate create legal refund opportunities and help plan for tax and eﬀective tax rates in future years.
Regarding VAT and other indirect taxes: Identify risk areas and sustainable planning opportunities for indirect taxes throughout the tax life cycle. Manage your client’s indirect taxes eﬀectively to improve day-to-day reporting for indirect taxes, reducing attribution errors, reducing costs and ensure that indirect taxes are handled correctly. Ensure that your client is VAT compliant by identifying the right methods and accounting systems. Review your clients accounting system regularly.
9. Change mindsets
Some people have a total misperception regarding tax aﬀairs, especially being tax compliant.
We urgently need to correct such thinking of inaccurate information to project the true reality of doing business. Help your client by building strong tax compliance, being transparent, implement eﬀective risk management protocols and a high performing tax function.
10. The big countdown to the regulation of Tax Practitioners
The TAA requires that all tax practitioners register with a recognised controlling body before 1 July 2013. It is a criminal oﬀence not to register with both a recognised controlling body and SARS.
The Act requires that minimum academic and practical requirements be set to register with a controlling body. Make sure you are registered if you still want to practice as a tax practitioner in future.