New law may 'break' taxpayers
Cape Town - If it is not introduced with circumspection, the tax administration bill could break the taxpayer’s spirit, said Johnny Eliades, a member of the Association of Chartered Certified Accountants (Acca) and a tax practitioner, on Tuesday.
In the public hearings related to the bill before the parliamentary standing committee on finance, Eliades said that one of his clients had owed the South African Revenue Service (Sars) R1.5m.
It was a black entrepreneur whose business had started out small but had grown briskly over four years and had begun to create jobs.
Sars had begun extracting the money directly from the client’s bank account, even though he had offered to repay the debt at a rate of R50 000 a month so that he could continue to pay his employees. He had even offered to pay R100 000 a month, but Sars had refused to budge.
Eliades said in another instance Sars had taken seven months to repay the R600 000 it owed a client, while at the same time pressing the client for his VAT payments.
Committee chair Thaba Mufamadi (ANC) said that Eliades’ examples were relevant in the light of job creation and the impact of the recession on small businesses, and that third parties such as the employees of a taxpayer should not be inconvenienced. He said National Treasury should take this into consideration.
Advocate Steven Budlender of the Victoria Mxenge advocates’ group said the bill was not unconstitutional.
This followed criticism that aspects of the bill might be unconstitutional – such as Sars’ right to search a taxpayer’s property and seize goods without a warrant, as well as the "pay now, argue later" principle.
Budlender admitted that Sars had asked him – for a fee – for his opinion on the constitutionality of the bill, but stressed that he was convinced the bill was not unconstitutional, no matter who had asked his legal opinion.
In his view at least 20 wealthy industrial countries grant their tax authorities similar or even larger powers.
Stiaan Klue of the South African Institute of Tax Practitioners said that aspects of the bill should not be included simply because they represented international practice.
Klue however congratulated National Treasury on its efforts to simplify and consolidate tax legislation.
The bill provides for a tax ombudsman, but in more than one presentation tax practitioners asked for greater powers for the ombudsman.
In terms of the bill the ombudsman is funded by Sars and Sars personnel would work there.
The ombudsman could therefore not be considered independent, it was said. The ombudsman should also have to account to the standing committee on finance, said Klue.
Kyle Mandy, head of PwC audit group’s tax unit, said the principle of an ombudsman was welcomed, but the ombudsman would not have sufficient authority to force Sars to do anything.
In the US the “taxpayer’s advocate”, an institution looking after the interests of taxpayers, for instance has the power to serve, on behalf of a taxpayer, an “assistance order” on the US revenue service.
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I think almost half of all taxpayers can tel of how long SARS takes to pay out and moan and complain about everything ect BUT charge interest each second your late even with a dispute going on with SARS. Where is my interest for your late payment SARS?
And what about taking companies on who give their personnel a package that includes tax deductible items they are not even allowed to get?? Poor people don't even know it but SARS don't give a crap, they nail them instead of the company knowingly doing this to pay less tax themselves.
"In his view at least 20 wealthy industrial countries grant their tax authorities similar or even larger powers" - but we are not a wealthy industrial country. We are a country where there is so much corruption at government level that it should surely be unconstitutional to allow these thieving idiots to raid our bank accounts at will while they take their time about sorting out our issues. SARS is much, much better than they used to be, but there are definitely still some huge problems. When they make a mistake they can take up to a year to fix it. In the meantime they can just raid your bank acount for the mistaken amount? What incentive do they then have to fix the problem?
Welcome to the Real South Africa. There is a law for ordinary citizens and tax-payers, but an exemption for the ruling party who sweep all their misdemeanors under the carpet. Travelgate was a clear proof of this as was the scrapping of the investigations into the arms procurement deal in the face of clear proof of bribery, corruption and fantastic enrichment of a few individuals. The luxury jail cell given to Tony Yengeni was further proof that if you are connected to the ruling party, are caught in criminal activities and go to jail, MP's will reward you with Nando's Chicken, flat screen TV's and chauffeur driven limo's.
just another way to ensure they get what they want when they want it and without argument. next they will tell us the government is here to serve us.
The story about the client who owed R1,5m is of course frightening... but a lot depends on how and why this R1,5m bill had run up, and had remained outstanding in the first place. If the client had been remiss in rendering his returns, or keeping good enough records to be able to meet his tax liability, then he would have nobody to blame but himself. And his accountant, of course... :->
Its was acknowledged that the clients business had rapid growth, and this rapid growth probably meant that he could not keep up with the huge minefield of laws that surrounds taxes and liability. Seeing as SARS charges huge rates of interest, it is surprising that they did not allow the fellow to repay his liability in installments. True black entrepreneurs should be encouraged and SARS should have a mentor-ship department such as they have in other countries which would provide fast growing businesses with the tools to survive and grow, not simply kill the goose laying golden eggs.
I have an issue with taxes levelled on imported goods. SA Customs often classifies goods incorrectly and then charge the wrong rate of tax. Getting that reversed means you have to send the items back to Customs at considerable risk. Furthermore it is a sin that they charge 10% and then 14% on top of that and this excludes inspection fees etc.
They are killing business and job creation oppertunities -some capital goods can not be sourced locally and they still charge you import duties -I think millions of jobs are lost this way, and if only they knew, by creating a long term job you in effect create long term taxability, not just on one short-term transaction -eich!
SARS: Always happy to destroy jobs wherever they go. Unfortunately black entrepreneurs are victims too.
"Destroy the taxpayer's spirit" Damn!!!! they always want to take awy my Uncle Johnny, Uncle Jack and my Klippies.
this is a clear indication that job creation is not the centre of attention for this government. If it was then the tax policies which affect business DIRECTLY would be aligned with other policies.
When you owe Sars you must hurry up and pay but when they owe you a large sum they really take their time to payout and interest is lost on that money. And I disagree with the 'pay now argue later' principle that can take years to sort out.
The best thing in SA is to get out of the system.If you have a business try and live on as little as possible, and dont buy unnecessary, to pay VAT, and keep your nose clean at SARS.
These laws should differentiate between new and old companies.
People should realise that SARS, Customs & Excise ARE the most powerful entities in this country, with unlimited powers. They are more powerful than the police and even Parliament. They actually own us all and may take away our money, property, in fact all our possessions and we have absolutely no recourse in the law of this country to recover what is ours.
The problem is that we give power to SARS by not paying our taxes. If everyone who owes money were honest enough to pay in the first place, we wouldn't have SARS so powerful. They wouldn't need to appeal to government to give them such rights if they knew everyone was honest. Its a catch 22...its an attempt to catch out the dishonest, but it may impact people who are guilty free. I do still think that the tax in this country is way too high for the benefits we see in return...