How to choose the right tax practitioner
06 August 2014
Posted by: Author: Fin24
Johannesburg - When using a tax practitioner to file your annual tax return, do not merely go and grab the first one you meet who says he knows how to file a tax return, warns Gerrie van Niekerk of Tax-Strong.
"That might make you wish that you rather did your filing by yourself. Even worse, it might end up costing you a lot more than just his fee," says Van Niekerk.
He offers a few questions taxpayers can ask a tax professional before making a final decision of whom to use:
Are you a registered tax practitioner?
Every person who gets paid to file tax returns on behalf of others or gives tax advice has to be registered with Sars as a tax practitioner.
They also have to be registered with an approved controlling body like the South African Institute of Tax Professionals or the South African Institute of Chartered Accountants.
Ask your tax practitioner if he is registered with Sars and also with which controlling body..
If he is registered he will have a Sars practitioner number as well as a membership number with his controlling body of choice.
If you are very suspicious you can double check his membership by contacting his controlling body.
Controlling bodies are there to make sure that all their members are up to date with their personal taxes, that they don't have criminal records and that they have the necessary qualifications and skills to file other people's taxes accurately.
What is your tax experience?
Many practitioners list their qualifications after their names. To most people that means very little as they don't know what these stand for.
Ask your practitioner where he and the people in his team gained their experience.
A couple of years of experience often counts a lot more than a fancy degree with very little experience.
Where he gained his experience is important as well. Someone working at an accounting firm will in most cases gain more experience filing tax returns than someone working at a bank, for example.
Ask whether he has ever dealt with your particular situation.
Every tax return is different. If you have a basic return with only an IRP5, for example, then any tax practitioner worth his salt will be able to file it in his sleep.
If you have investments or earn rental income from a property you own then your tax return does become a bit more complicated.
It is best to make sure upfront that he has experience dealing with something similar.
Even if you only have a travel allowance or medical aid expenses you should still ask him if he has ever dealt with it before, just to make sure he knows what he is doing.
What documents will you require from me?
This is a good question to ask to avoid going back and forth trying to get everything that is needed.
That only delays the filing of your return and possibly your tax refund as well.
All the best professionals will get you to complete a questionnaire or ask you some questions in person to understand your unique tax situation.
Once he understands your situation he can request all the documents that he needs from you.
If your tax practitioner tells you he does not need anything from you to file your taxes then alarm bells should be ringing.
All tax practitioners will also require you to sign a power of attorney form that allows them to act on your behalf at Sars.
How do you calculate your fees?
Rather then ask what his fees are, ask how he calculates his fees.
Most professionals base their fees on the complexity of your tax return and the time it takes to prepare and file it.
If you earn income from a trade, business or rental property you should expect to pay a little bit more than others.
If your tax practitioner calculates his fee on a percentage of the tax refund that he can get you, don't walk, but run in the opposite direction.
Sars does not like this one bit, so it is best to avoid anyone who tells you his fee is based on the size of your tax refund.
Sars argues that this encourages practitioners to lie and claim back more money than is actually due.
Will you file my return electronically?
All the best tax professionals file their clients' returns electronically, either using Sars e-filing or specialised tax software.
You would want your return to be filed electronically as well for two important reasons:
- The time Sars takes to process an electronically filed tax return is much quicker, which means that if you are due for a refund, you will get your money much quicker as well.
- The second reason is because the chance of making a mistake on an electronically submitted return is much smaller than with a manually completed and filed tax return.
What if I get audited?
If a tax practitioner files your return and you then get audited, he should ideally handle the audit on your behalf as well.
In most cases it will just be a matter of submitting the supporting documents to Sars, which he will already have anyway.
If he filed your tax return for you he should not charge you extra for uploading the documents either.
What is the best way to get hold of you?
"During the tax filing season you will be able to find many "tax professionals" in front of the Sars offices willing to help you for a fee," said Van Niekerk.
"Come the end of filing season they all disappear into a black hole and are nowhere to be found when you have questions or problems."
He said it is best to choose a professional who will be there for you if you have any trouble with Sars later.
Look for someone with an office number and not only a cellphone number.
It is also better to use practitioners with office addresses as well as an online presence.
The bigger their presence, the less likely they are to skip town before you need them.
Try to get as many contact numbers, email addresses and other details as possible for your practitioner of choice and keep it safely in case you need it later.
This article first appeared on fin24.com.