|5 steps to mitigate tax risk|
5 steps to mitigate tax risk
Taxpayers are constantly exposed to non-compliance penalties and the threat of sanctions. Stiaan Klue, Chief Executive of the South African Institute of Tax Practitioners (SAIT) looks at five essential steps in managing your tax risk profile.
Virtually every taxpayer will at least sometime in his lifetime commit a tax offence, whether it is a minor offence such as failing to inform SARS about a change in address, to a more serious offence such as failing to submit your tax return. Although the one offence may seem less serious over the other, the fact that it is an offence is still exposing them to penalties and tainting their record with SARS.
Stiaan Klue, Chief Executive of SAIT comments, “It is important to note that the SARS modernisation programme, which includes the self-assessment e-Filing system, has equipped SARS with valuable statistical data and the ability to develop a world class risk engine that can expose any form of non-compliance and fraud. The penalties for understatement of income are certainly something taxpayers and their tax advisers should carefully consider when assessing their tax exposure, and potential penalties and other sanctions.”
And with the notion that one will commit at least one offence in their lifetime, it is perhaps a good thing to consider mitigating your exposure through adopting the following five steps.
1. Change your attitude towards filing tax returns within the deadlines set by SARS. You have a legal and social responsibility to file honestly and on time. If you feel overwhelmed by the whole idea, secure the services of a professional tax practitioner.
2. Keep your own proper tax records for the required 5 year period. You are primarily responsible for your own tax affairs, although you use the services of a professional.
3. Ensure your tax practitioner is tax compliant in his/her personal capacity. SARS knows which tax practitioners are delinquent in their personal capacity, and that reputation may expose you.
4. Ensure your tax practitioner is a member of a professional controlling body. From 1 July 2013 all tax practitioners must belong to a professional body and follow strict standards.
5. Do not offer a contingency fee to your tax practitioner calculated as a percentage of the refund paid by SARS. This practice is not professional and may expose you to either under declaration of income or inflated deductions.
Stiaan Klue is the Chief Executive of The South African Institute of Tax Practitioners (SAIT), which has been appointed as the National Board Examination Adjudicators for tax professionals following their official recognition as practising Profession Body by the South Africa Qualifications Authority (SAQA).
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Issued by marcusbrewster