The dangers of getting compliance wrong can be crippling.
If your tax advisors are still in the business of finding loopholes to lighten your tax load, your tax planning tactics are out of date. SARS has spent the last two decades and vast resources closing down tax schemes and structures that companies and individuals were using to minimise their tax burden. A more cost-effective tactic that SARS adopted in combating tax evasion was to lower the effective tax rate to a rate acceptable to the taxpayer, at the same time increasing the penalties for misbehaviour.
Did you know?
In 1994 the tax for individuals earning the inflation-adjusted equivalent of R1million in today’s terms had an effective rate of 39.6%, and companies 49%. Today an individual taxpayer earning R1million has an effective tax rate of 31.3% and companies tax at 38.8% (if Dividend withholding tax is included). Over the last 20 years of democracy individuals in the highest marginal income tax bracket have saved 8.3% and Companies 10.2% in their effective tax rates.
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.