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Taxpayers bear brunt of complex and harsh legislation

Wednesday, 02 December 2015   (0 Comments)
Posted by: Author: Ingé Lamprecht
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Author: Ingé Lamprecht (Moneyweb)

Tax Administration Laws Amendment Bill introduces ambiguity with regard to undisputed errors.

The financial implications of errors in the completion of income tax returns may leave taxpayers with no other option but to consult a registered tax practitioner in order to perform this task for them.

One example of a recently proposed amendment to tax legislation that could have significant financial implications for taxpayers relates to the request for the correction of tax assessments.

David Warneke, director and head of tax technical at BDO South Africa, says in terms of a proposed amendment in the latest version of the Tax Administration Laws Amendment Bill (TALAB) of 2015, the South African Revenue Service (Sars) will not consider requests for the correction of tax assessments in future unless the assessment contains a "readily apparent” undisputed error. The bill will likely be promulgated in its current form.

Warneke warns that taxpayers could be severely prejudiced by the proposed change.

"What is readily apparent to one person is not necessarily readily apparent to another.”

The number of cases in which Sars is likely to grant requests for corrections will probably drop substantially. Moreover, the proposed amendment will possibly force taxpayers to seek and pay for the services of a registered tax practitioner because the risk of non-compliance is just too significant, he says.

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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.

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