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Taxman To Receive Detailed Bank Account Information of all Bank Clientele

Monday, 10 September 2012   (0 Comments)
Posted by: Author: Di Seccombe
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Taxman To Receive Detailed Bank Account Information of all Bank Clientele
In order to verify the accuracy and extent of disclosure in respect of information submitted, SARS may make use of collaborating information received from third parties.
The right that SARS has to demand information from identified third parties is created in terms of section 69 of the Income Tax Act (the Act).Section 69 is far reaching and provides that, "Every person shall, if required by the Commissioner, furnish to him, in such form and within such time as may be prescribed or as the Commissioner may direct, returns showing.” 

The section then sets out a comprehensive list of the information the Commissioner is entitled to be furnished with. Interestingly section 69 is recreated in a deceptively shortened, yet wider and more onerous form in section 26 of the Tax Administration Act that deals with third party returns and reads, "The Commissioner may by public notice require a person who employs, pays amounts to, receives amounts on behalf of or otherwise transacts with another person, or has control over the assets of another person, to submit a return with the required information in the prescribed form and manner and by the date specified in the notice.”
Government Gazette no. 35090 (the Gazette), issued on the 29 February 2012, has fundamentally changed the access that SARS has to every person’s bank account information due to the information required to be submitted by the third parties defined in the Gazette.

The Gazette gives notice that in terms of section 69 of the Act, all "reporting institutions” are required to submit bi-annual returns directly to SARS in respect of all monies "invested with, loaned to and deposited” with the reporting institution, and in respect of interest received by or accrued to any person from the reporting institution.The first returns, covering the period 1 March 2012 to 31 August 2012, are required to be submitted by the reporting institutions to SARS by 31 October 2012.In terms of the Gazette, reporting institutions must submit returns for both natural persons and, as per the Gazette, "other persons” which includes companies and trusts.

The Gazette defines a reporting institution widely to include, for example, all banks (including Postbank), companies listed on the JSE that issue bonds, debentures and similar financial instruments, and organs of state that issue bonds (government bonds).
Account holders with the defined reporting institutions must understand that the Gazette goes a great deal further than merely requiring the reporting institutions provide SARS with information on interest paid by the reporting institution to the account holders.Detailed information of all account movements within the relevant period covered by the return must now be provided by the reporting institutions to SARS. 

The information the Gazette dictates each return contain is extensive and includes the monthly movement of an account. While the requirements differ slightly for natural and "other” persons, the issues raised below are common to both.The returns must disclose for all persons: identity particulars and tax reference numbers, the closing balances of the accounts at the end of the relevant period, any interest amounts received or accrued by the persons from the reporting institutions and the monthly totals of all debits and credits to the accounts. 

No clarity has been provided on what SARS will make of this information.The information at the very least will assist it in identifying all persons who should be registered for income tax and VAT purposes and the non-disclosure of all receipts and accruals (local and foreign) by registered taxpayers when making provisional payments and submitting tax returns.The independent verification of information submitted by vendors in their VAT returns will be possible and vendors may be required to account for any movement in the enterprise’s bank account not matching the output and input VAT disclosed in a VAT return.

For many years tax advisers have been plagued by the question from clients not wishing to heed sound tax advice, "Yes, I hear you, but how will SARS know?” The answer now is very simple, "Government Gazette 35090.”
Source: By Di Seccombe (TaxTALK)



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