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Complaints to the Tax Ombud and the Fear of Reprisal. Canada Gives its Taxpayer Comfort

20 September 2013   (0 Comments)
Posted by: Author: Johan van der Walt & Danielle Botha
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Author: Johan van der Walt & Danielle Botha (CliffeDekkerHofmeyr)

The first formal mention of the appointment of a Tax Ombud in South Africa was in the Draft Tax Administration Bill (released for public comment on 29 October 2010). Said legislation was introduced in response to the perceived inability of the South African Revenue Service (SARS) Monitoring Office to adequately address complaints and administrative difficulties faced by taxpayers and advisers.

Finance Minister Pravin Gordhan announced the establishment of a dedicated ombud for tax matters in the 2012 Budget Speech. The intention was to provide taxpayers with a low-cost mechanism to address administrative difficulties that could not be resolved by SARS.

The Tax Administration Act, No 28 of 2011 (TAA) took effect  on 1 October 2012. Part F of Chapter 2 sets out the powers and duties of the Tax Ombud. Section 259(1) of the TAA requires the Minister of Finance to appoint the Tax Ombud within one year of the commencement date of the TAA, ie by the end of September 2013. The appointment of the SA Tax Ombud is around the corner.

Going hand in hand with the appointment of the local Tax Ombud is the SARS Service Charter. It was launched in October 2005 and set certain "clearly defined deliverables" which had to be implemented by 2007. The Charter was also intended to be a "statement of intent through which SARS undertakes to uphold and respect the rights of taxpayer". Furthermore, the Charter would be the yardstick against which "compliant taxpayers can judge the quality of SARS' processes, its integrity and its conduct." (Refer SARS press release, 19 October 2005 and the SARS Guide titled "Review of SARS Service Charter & Standards,  Version1")

The concepts of a Tax Ombud and taxpayers rights are well-known internationally. The Canadian Revenue Authority (CRA) for example, published a "Taxpayer Bill of Rights Guide: Understanding your rights as a taxpayer." It details what taxpayers can expect  from the CRA and how the CRA should conduct itself when interacting with taxpayers.

Interesting, though, is the recent addition of Article 16 to the CRA Taxpayer Bill of Rights. The Canadian Tax Ombud was appointed in 2008. During August 2013 the CRA addressed what it called a taxpayer's potential "fear of reprisal". This could manifest itself where for example a taxpayer considered complaining to the Tax Ombud or when invoking the Taxpayer Bill of Rights. The CRA felt that a "fear of reprisal... has the potential to undermine trust and confidence in the tax system."

On 26 June 2013 the Canadian Minister of National Revenue and the Canadian Tax Ombud jointly announced the introduction of Article 16 into the CRA Taxpayer Bill of Rights, namely: "You have the right to lodge a service complaint and request a formal review without fear of reprisal."

The intention is to give Canadian taxpayers comfort that invoking a Taxpayer Right or lodging a complaint with the Tax Ombud would not result in "harsh treatment from the CRA." The joint announcement stated: "This right means that if you lodge a service complaint and request a formal review of a CRA decision, you can be confident that the CRA will treat you impartially, and that you will receive the benefits, credits, and refunds to which you are entitled, and pay no more and no less than what is required by law. You should not fear reprisal." Internationally Canada has taken the lead to deal with "fear of reprisal."  It will be interesting to see whether other revenue authorities  will follow suit.

This article was originally published on cliffedekkerhofmeyr.co.za on 20 September 2013

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