The Tax Administration Bill is currently before Parliament. This Bill will introduce significant changes to our tax system. The Bill has been a work-in-progress for a few years now, with SARS engaging public comment and stakeholder discussions throughout its development. The Bill has had its share of criticism with regards to the extension of powers to SARS. Yet, points out Ettiene Retief, (pictured) chairperson of the national tax committee at the South African Institute of Professional Accountants (SAIPA), tax remains an unavoidable and necessary provision for the functioning of society. It is for this reason that he says the provisions of the Bill represents the powers and obligations required for SARS to effectively collect taxes.
“Some are unhappy with the extension of powers, such as the provision allowing SARS to conduct a search and seizure of documentation without a warrant,” says Retief. Perhaps surprisingly, it is a power which SAIPA believes is necessary. The reasoning for this endorsement is simple, yet profound: if you have nothing to hide, you have nothing to fear. “Additionally, we can’t have evidence being shredded in the time it takes to secure a warrant,” he adds.
Given that this potentially represents a perceived violation of privacy, Retief is quick to add that the implementation of such measures comes with additional burden on SARS.
With the vast amount of legislation, disclosure, and regular changes, the taxpayer is overwhelmed and faces significant risk for non-compliance. With the added powers that are to be bestowed on SARS, it is important to consider the taxpayers rights. It is in this vein that Retief believes the Bill offers some advantages.
This is behind the mooted introduction of a Tax Ombud – to enable cost effective redress for taxpayers should issues arise, without the need to engage the overburdened judicial system, which is often not available to taxpayers due to the costs. “The Tax Ombud is a vital player in assisting taxpayers when they feel they are not getting fair administrative action from SARS,” asserts Retief.
However, he notes that as the Bill presently stands, any decision by the Tax Ombud is not binding on SARS, therefore offering no guarantee of a result for the taxpayer. “That’s risky; as SARS can in theory, simply ignore any ruling, requiring the taxpayer to go to court again anyway. Even if this is not the case, the taxpayer will be hard-pressed to assign much faith in a system that provides certainty and binding recourse.”
Retief therefore says SAIPA is advancing the case for a Tax Ombud which has teeth and which can hand down binding decisions. “Of course, if either party still feels wronged by the decision, there remains the avenue of escalation to a judicial process,” he adds.
Raising another issue which Retief says SAIPA is petitioning on behalf of its members, he points to the common-law principle of ‘legal professional privilege’. This refers to the relationship between attorneys and client in terms of which they cannot be forced to disclose their discussions.
How this applies to the accounting and tax practitioner profession is clear, as Retief explains: “Daily taxpayers approach their accountants, auditors, or tax practitioners for advice regarding tax law and administration. Accountants, auditors, and tax professionals do not enjoy professional privilege, but SAIPA believes this to be necessary.”
He stresses that the underlying principle for which SAIPA is lobbying is a fair system that allows a taxpayer the right to seek advice without fear of self-incrimination. “Accountant Tax professional can’t give sound advice if a client is afraid of disclosing all the facts,” Retief notes. “Understandably, there must be limitations. We propose that professional privilege be limited to providing advice; and not a provision to hide behind when helping taxpayers to evade tax liability, but taxpayers should have the right to seek counsel around tax issues and affairs without fear.”
Such privilege, he adds, should only be extended to registered tax practitioners who are also registered with a relevant professional body that has appropriate code of conduct and disciplinary processes to address abuse or un-professional conduct.
“SAIPA supports SARS in the administration and collection of taxes, as well as the widening of the tax base. However, a balance of powers and rights should be provided to ensure a fair and efficient tax system, which enhances general tax morality.”