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The Tax Administration Bill

Sunday, 08 July 2012   (0 Comments)
Posted by: Author: Professor Daniel N Erasmus
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The Tax Administration Bill
Just knowing the new TAB provisions is not enough. Most other seminars will cover the content and not necessarily the constitutional context, value and importance.Having made the Constitution and administrative law a key area of my practice, together with research, study and teaching, I am well positioned and excited to comment  on, and teach, the new TAB that will become law later in 2012.

Why the TAB?
The key tax legislation affected is the Income Tax Act, 1962 and the Value-Added Tax Act, 1991.Both laws contain many provisions dealing with the administration and procedural issues around taxes:
- Filing tax returns
- SARS audits
- SARS disputes
- Penalties and interest
- Miscellaneous administrative and procedural issues.
All these matters are now handled in one law – the TAB.
Of great interest is the area around SARS audits and disputes.This is also the area in the new TAB that received much attention, criticism and revisions. The new TAB has been two years in the making, giving all the opportunity to comment and criticise.The product is much refined, but still with some potential problem areas in the audit and dispute area.

My practice has been around representing large taxpayers ensuring that SARS conducts itself (in audits and disputes) in a lawful, reasonable and fair manner, as demanded by the Constitution.The new TAB seeks to accomplish this lawful, reasonable and fair conduct by SARS.However, the words "lawful, reasonable and fair” are pregnant with common law meaning, beyond any definition or provision in the new TAB.Unfortunately, most tax advisers come from a strong technical background without learning about the constitutional and administrative law concepts of lawfulness, reasonableness and fairness, when interacting with SARS.

The significance lies here; if SARS’ conduct is unlawful, unreasonable or unfair, it will be inconsistent with the Constitution and invalid.This brings about the following questions:

What is unlawful conduct by SARS?
What is unreasonable conduct by SARS?
What is unfair conduct by SARS?
When is the SARS’ conduct inconsistent with the Constitution?
What part of the Constitution?
If SARS’ conduct is invalid, what are taxpayers’ rights? What are they supposed to do?
What court do taxpayers address these issues in; the high court or the tax court?
Why is the difference between the courts relevant?
The simple answer (to be explained in the seminars) is that in the last decade, my legal team and I have represented taxpayers in audits and disputes totalling just on R20 billion.Those same taxpayers paid out on average less than 3% to SARS.My team has focused extensively on the lawfulness, reasonableness and fairness of SARS’ conduct in achieving these results for taxpaying clients. The seminar will teach you to do the same, with many practical examples.

More often than not, SARS officials did not respect the taxpayer’s constitutional rights and SARS did not adhere to its constitutional obligations.In the past, SARS has bragged that its specialised tax units have raised assessments in excess of R18 billion in a year.When you look more closely at the actual collection numbers, it has collected less than 5% of that.The rest is outstanding debt waiting for a tax court trial date in five to eight years’ time.Now you understand why SARS wants to enforce the pay-now-argue-later principle.That together with the enormous costs of running a tax dispute will cripple most taxpayers. Even the large ones opt to settle, even though many of the assessments are questionable.

The Solution – Know how to handle a SARS audit under the new TAB, enforcing all your constitutional rights.The two go hand in hand.Just knowing the new TAB provisions is not enough.Most other seminars will cover the content and not necessarily the constitutional context, value and importance.
Source: By Professor Daniel N Erasmus (TaxTALK)



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