The tax amnesty offered to small businesses as from 1 August allows small business owners,including taxi operators, to become tax compliant without punishing them for the past.Jenny Faber,attorney at KHFG Attorneys, unpacked the amnesty in a two-part discussion on Tax Issues, broadcast on Summit TV.
The discussion kicked off with the statement that this was the second tax amnesty offered to non-compliant or even non-existing taxpayers in quite a short span of time.Why did SARS go this route? Jenny explained that the reason was very clear. SARS would like to broaden the base of tax payers contributing to the fiscus of the country and would like to increase the number of those who are tax compliant.
In the beginning there was talk that the tax amnesty would only be available to taxi operators, but this is not the case.All small business owners who fall into the stated category are eligible.There are,however, certain requirements the small business owner has to meet in order to be able to apply for amnesty.Firstly,the person or business must have carried on a trade in 2006.Furthermore, it should be a natural person, a closed corporation(CC), trust, body corporate or even a cooperative; but not a listed company.If you are a member of a company or a CC, the shares must be held by natural person.
In order to be considered a small business,the gross income (turnover) of the business should have been less than R10 million,excluding VAT,in the 2006 tax year.The tax covered by the amnesty includes income tax, PAYE, the skills development levy and unemployment insurance contributions (UIF).
The next significant question Jenny dealt with was what period of time was covered in the amnesty.The amnesty applies to the2006 tax year. The 2006 tax year for individuals and trusts is the period from1 March 2005 to 28 February 2006.For other entities, such as companies and close corporations, the 2006 tax year is the financial year which ends during the period1 April 2005 to 31 March 2006.
Would a small business be granted amnesty under all circumstances?Jenny concluded that as long as you have submitted the right documentation and not misrepresented any facts, you would receive amnesty.
Would it be difficult to apply for tax amnesty?According to Jenny it is very easy to apply for tax amnesty. You can do so online on the SARS web site.The documentation you need to submit is a 2006 tax return and documentation with information about assets and liabilities and the taxable income amount for the 2006 tax year. If you have never been a taxpayer, SARS does not need to know your taxable income amount in previous years.
Once you have submitted the correct documentation, chances are excellent that you will be granted amnesty.If the Commissioner feels that you have not been100% honest in the information provided,the amnesty application can be turned down.
The next point of discussion dealt with the possible penalties you would have to pay for previous non-compliance.Jenny was of the opinion that this was a wonderful situation where you would receive general pardon.
What happens if you are already under investigation from SARS? Jenny said that you would not then be able to apply for amnesty, unless SARS withdrew the letter stating that your tax situation is being audited.Finally, the question arose about what would happen if you did not make use of this amnesty. Jenny was very firm in her reply that a person choosing this route would be liable for additional tax, penalties and even criminal charges.
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.