Tax Admin Bill gives teeth to tax authorities
30 June 2011
Posted by: SAIT Technical
The Tax Administration Bill was introduced by Finance Minister Pravin Gordhan yesterday aimed at providing greater certainty and "better coherence” in tax administration law while also establishing a new office of tax ombudsman to sort out taxpayers’ difficulties. While acknowledging that tax administrations around the world "are always 10 steps behind the (tax) planners”, Gordhan told a briefing at Parliament that the bill sought to facilitate tax compliance, while providing "consistency in the application of tax law and to further improve the levels of tax compliance in South Africa”.
Gordhan said the bill should enable business sustainability "by improving consistency in administration of the tax laws and cutting down on red tape”. "Equally it should protect the fiscus and compliant taxpayers from the corrosive effects of non-compliance,” he said. He explained that taxpayers would welcome "a broad range of measures” that would underpin efforts to simplify their interactions with the SA Revenue Service (Sars). Gordhan added: "Greater access to third-party data will enable the further prepopulation of (tax) returns.” He said firms in particular would be turning to the e-filing procedures where individual taxpayers had already paved the way. The basis for a phased move to a single registration number "across tax types has been put in place, as has the basis for modernising and transforming Sars’s accounting systems”.
During a debate on the bill in the National Assembly yesterday, the opposition expressed some concern at measures for search and seizure. DA finance spokesman Dion George said: "We are concerned about searching premises (by Sars staff) without a warrant. I don’t know why rights have to be interfered with in such a manner.” Gordhan reminded journalists of the Enron case where documents had been shredded. Smaller forms of Enron were "happening all the time”, which necessitated the search and seizure powers, which would only be used where there was "prima facie evidence that there is a risk to the fiscus”. George welcomed the establishment of a tax ombudsman. Cope’s finance spokesman Nick Koornhof welcomed the bill, but said he was concerned with the suspension of section 45 of the Income Tax Act – through the Taxation Laws Amendment Bill – which had been raised earlier in the week in Parliament’s standing committee on finance and "left a scar of mistrust”.
Explaining the suspension of the clause, Gordhan told MPs that this was a technical provision allowing for mergers, acquisitions and reorganisations within companies "without a tax liability”. It had been put in place "for commercial purposes”, but the original intention had gone awry. Although a range of stakeholders, including Business Unity SA, the Banking Association of SA and Ernst & Young tax specialist David Clegg, were concerned about the impact this suspension would have on black economic empowerment deals in particular, Gordhan said there had been some "creative tax planning which was resulting in billions being lost to the South African fiscus”. Asked if he could say who these tax planners were, he said Sars and the Treasury were aware "of some of them”, noting that the suspension of section 45 would be "for a limited time”. Gordhan said that there needed to be "full disclosure of these schemes” and Sars should not be asked to be "like eternal dentists, pulling one tooth at a time”.