You Don’t Need A Manual , Says Manuel
01 May 2007
Posted by: TaxFind™
You Don’t Need A Manual, Says Manuel
"Even those who found the (tax return) process complicated and hated forms like I do will be able to fill in the new one”, said minister of finance, Trevor Manuel in May when he unveiled significant changes that SARS has introduced to the income tax process.
The new, simplified tax submission process and the redesigned income tax return will make it considerably easier for individuals and businesses to complete and file their returns. "The number of returns that need to be assessed every year has reached unprecedented volumes and will continue to grow at around 8% per year over the next three to five years.This volume growth places a tremendous strain on the current capacity and is challenging the service level promised in the SARS Service Charter,” Manuel said.The good news for South Africa is that there is a sustained annual growth in the tax register and that levels of compliance are improving.At present there are in the region of seven million registered taxpayers, of which five million are individuals, 1,7 million companies and 300 000 trusts.This places strain on SARS resources.
The new process is intended to ensure greater efficiency and faster turnaround times to SARS’s internal processes in capturing, verifying and assessing the information submitted by taxpayers.Most revenue for personal income tax is generated by PAYE and provisional payments, but a significant proportion of SARS’s processing resources are used to manage the annual assessment process of individual income tax returns.
An easier process for individuals
Two new personal income tax returns have been developed to replace the can be downloaded, partially completed, saved, updated and shared electronically.If completed electronically, a 2D barcode is activated which automatically captures taxpayer information.
The electronic returns will be available for completion online via the SARS eFiling website and at SARS offices or the return can be completed, printed, signed and posted or delivered to SARS. Once received, if the return has been captured electronically, the 2-D barcode will be scanned and all the information automatically and accurately uploaded onto the SARS system doing away with the need for manual capturing and eliminating possible errors.For returns completed by hand, SARS will test the use of ICR (Intelligent Character Recognition), which will allow for these returns to be scanned and most of the handwritten characters to be recognised automatically.
The eFiling facility via the Internet remains the easiest and quickest way for taxpayers and practitioners to file returns as it eliminates paperwork and allows the fastest processing times.It also reduces volumes to be processed manually, thereby improving manual turnaround times. SARS is introducing a range of enhancements to the eFiling facility to further encourage use of this facility.
Feedback from users last year indicated that the registration process for eFiling was a disincentive for use.This year the registration has been simplified with security being enhanced using third party data verification.This year, all the different tax return types: IT12S, IT12C, IT14, IT12TR and IT12EI will be available for submission via eFiling.If taxpayers submit their 2007 return via eFiling, SARS will not levy any additional tax for late submission. Some individual taxpayers, anticipating previous five returns: the IT12S, IT12SS, IT12SE, IT12SB and IT12BU.The IT12S is the standard income tax return to be completed by the majority of individual taxpayers (approximately 3,5 million) who earn a salary with basic allowances.The new IT12S only consists of two pages compared with the previous returns which were a minimum of ten pages.
The IT12C is the comprehensive income tax return to be completed by individual taxpayers who, in addition to the information provided for in the IT12S, have additional income and deductions, such as, business or rental income, farming operations, capital gains/losses and foreign income.This return is also significantly shorter and simpler than the previous returns.The first two pages are the same as the IT12S with an additional page for investments and an additional page for business income and a further page for farming and mining income.
Returns for companies to remain
The IT14, Trust (IT12TR) and Public Benefit Organisations (IT12EI) returns will remain unchanged, but SARS plans on simplifying and enhancing them in time for next year’s assessment harnessing technology to make it easier All income tax returns will be made available electronically, using freely available Adobe software.These returns that they owe SARS money, have been unwilling to use eFiling as it provides quicker processing, and should payment not be made by the due date interest will be payable.To encourage the use of eFiling for these taxpayers, the due dates for payment of assessed taxes for eFilers who file early will be delayed to the end of February 2008.
Should payment not be made by this date, interest will be payable from the date of the assessment. This does not affect the liability for provisional tax or interest on underpayment.The implications for provisional taxpayers will still be investigated and further details in this regard will be released at a later date.
Tax practitioners have engaged with SARS to provide an easier and more efficient objection and appeal process. To further encourage eFiling, the facility is to be expanded to provide taxpayers with the ability to electronically lodge objections and appeals via eFiling.
No more supporting paper work It has always been a huge burden, both on the taxpayer and on SARS, to attach all supporting documentation such as IRP5s, medical invoices, travel invoices and logbooks with the tax returns.Technological developments and the availability of electronic information from its original source - employers, financial institutions and more - have made it possible for SARS to verify information provided by taxpayers.Obtaining information in this way is more accurate and faster which means that no supporting documentation will be required to be submitted with any personal income tax returns (except potentially for high net worth individuals identified by SARS’s Large Business Centre).
All taxpayers must still use the supporting documentation to complete their returns but must then retain the supporting evidence for a minimum of five years in case SARS requests this information at a later stage as part of the auditing process.Taxpayers are reminded that a signed return constitutes a legal declaration subject to the full recourse of the law.
Benefits for all
Taxpayers will benefit from the new system in the following ways:
• Simpler return
• More ways to receive and submit returns
• No supporting documentation
• Faster turnaround times
• Track and trace of returns through the process via call centre
Employers stand to benefit due to:
• Reduced requirement for employees to take time off to complete and submit returns
• Improved awareness of employees of the process, their obligations and good fiscal citizenship
• Simplified manual PAYE reconciliation process
The advantages for tax practitioners are:
• Quicker return preparation and completion
• Faster turnaround times
• Later payment of assessed income tax for their clients (via eFiling)
• Electronic objections and appeal application (via eFiling)
• Visibly track and trace the progress of the returns
And finally for SARS:
• One standardised process to improve efficiency and productivity
• Decreasing manual, low value-add tasks and increasing value-add tasks
• Freeing up resources to focus on enforcement, service and education activities
• Improved track and tracing allows improved management and measurement
• Improved risk-profiling to better target enforcement activities
• Improved ability to meet Service Charter standards.
Source: Filing Season Newsletter (TaxTALK)