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Do you offer tax advice for free?

04 June 2013   (0 Comments)
Posted by: Author: Ingé Lamprecht
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Author: Ingé Lamprecht (Moneywebtax)

How the regulation of tax practitioners will be policed.

JOHANNESBURG - Individuals who offer tax advice and services free of charge do not have to be registered with one of the controlling bodies recently recognised by the South African Revenue Service (Sars).

Kyle Mandy, head: national tax technical at PwC, says the regulations around the registration of tax practitioners provide an exclusion for persons who are providing advice without receiving any consideration.

But it will also depend on the number of clients that such an individual has, adds Benjamin de Klerk, Sars specialist in the tax practitioner unit. 

"If you have quite a number of clients and you are doing this for free, we are obviously going to raise some questions," he says.

De Klerk says in cases where the practitioner is giving advice in exchange for something that could be converted into money, he or she would also have to register as a practitioner.

If an individual has nothing to gain by offering tax advice, then chances are that he or she would probably be giving the correct advice. If he or she however, stands to gain financially, there could be a risk of giving advice that might be to the detriment of Sars, he says.

De Klerk says Sars has discovered that in some cases, practitioners would tell their clients that they could get them a tax refund, but in exchange they would take a percentage of the refund as consideration.

This could put the tax practitioner in a compromised position, because he or she would have a vested interest in the monetary value of the refund that they could get for the client, he says.

Policing

De Klerk says once the revenue service starts auditing people - the truth will surface in cases where non-registered practitioners filed returns.

"In some instances it might be easier, in other instances it may be a bit more difficult, but we have our processes in place in order to be able to identify these kinds of individuals that are submitting returns and are probably not registered as tax practitioners," he says.

However, he cautions against assumptions that all practitioners are trying to "cook the books" or trying to be non-compliant. "I don't think that is the case."

He believes it is rather a few individuals who are bringing the industry into disrepute.

Why register?

Mandy says the drive behind the requirements for tax practitioners to register with controlling bodies is to provide for a minimum level of competence and to ensure that those who provide tax services are subject to professional codes of conduct and disciplinary procedures.

"So the real idea is, if you like, to eliminate those persons from the profession who are really not equipped to provide advice in the first place," he says.

"If you are not equipped to do it, you shouldn't be providing that advice as a business."

In terms of the Tax Administration Act, any natural person who offers tax advice or assistance in completing returns, needs to register with a recognised controlling body by the end of June this year.

Practitioners who do not comply with the legislation could be fined and may even face time in prison.


WHY REGISTER WITH SAIT?

Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

MINIMUM REQUIREMENTS TO REGISTER

The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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