Unit 2.5 Controls implemented by SARS (24) Flashcards
Control of eFiling system
SARS needs to identify an individual to make sure they are dealing with the correct person.
Before SARS will activate a taxpayer as an electronic filer, the following documents will be required
- Copy of SA ID or passport
- Copy of eFiling summary form
SARS will compare details provided in summary form with the ID and check for duplicated registrations
Why is this identification of an individual necessary?
This will prevent people from registering non-existent tax payers or committing identity fraud in order to conduct fraudulent activities.
Companies also have to be identified by SARS for the same reasons before being registered to use eFiling
The company’s PAYE registration number is verified by SARS before returns are issued to the eFiling users profile
Electronic filing means that returns are not
signed by the person completing the return
This signature acted as declaration by the taxpayer that they
completed the tax return form accurately and didn’t omit any information
When a return is submitted via eFiling it is
embedded with an electronic signature. This is legally equivalent to a signed physical return.
SARS also makes use of a system whereby
confirmation of payment is done
And email or SMS will be sent to the eFiler confirming details of payment after submission of return and payment is due
This will make sure that payments are not deducted from the wrong account
An email will be sent to user confirming if payment was successful or not
Employers are required to complete an
EMP501
This is a reconciliation form which reconciles and employees tax and UIF paid over to SARS to the total employee’s tax and UIF paid per the employers records and the total of all PAYE and UIF paid per employees IRP5 certificates
SARS issues a tax return known as an
ITR12 document in the case of individuals, an ITR14 in the case of companies and an ITR12T in the case of trusts.
The tax return is issued on request by the taxpayer after the end of the year of assessment
Taxpayers must complete the tax return by disclosing
All gross income, capital gains and losses, exempt income and allowable deductions.
The return must then be submitted to SARS for assessment.
Once SARS has completed the tax assessment they will then issue an
IT34 document to the taxpayer.
This document outlines the components used to arrive at the final net amount payable or refundable for the particular year of assessment and the date on which such payment is due.
30 Days allowed for an objection to the assessment
If a taxpayer does not agree with the assessment, they can
Object to the assessment by completing a Notice of Objection form within 30 days of the date of issue of the assessment.
Section 102 of the Tax Administration Act provides that the taxpayers bears the burden of proof, ie the onus is on the taxpayer to prove the grounds of objection and to show that the original assessment is incorrect.
If SARS disallows an objection or allows this only in part, the taxpayer is entitled to
Appeal against this decision by completing a Notice of Appeal form (ADR2 form) and submitting to SARS (within 30 days of notice disallowing)
The ADR2 must contain details of the disputed tax and the grounds of appeal and signed by taxpaper.
This appeal is then dealt with by SARS in one of three ways:
- It goes to the Tax Board
- It goes to Tax Court
- It goes through the Alternative Dispute Resolution process (ADR) and thereafter to the Tax Board or Tax Court if it is not resolved through this process.
(less formal, more cost effective, may be elected for, facilitator appointed to persuade to settle by agreement, aim to avoid litigation, not binding)
S164 the Tax Administration Act provides that
Unless a senior SARS official directs otherwise, any tax reflecting as outstanding according to an assessment must be settled by due date (not withstanding objection)
The Tax Board consists of
An advocate or an attorney who is Chairman of the Board, and if deemed necessary an accountant or representative of the commercial community.
Taxpayer must appear before
If either party is not satisfied, either may require appeal referred to Tax Court
Tax Court consists of
A judge of the Supreme Court, an accountant of 10 or more years as well as a representative of the commercial community.
Taxpayer does not need to be represented.
Decision does not create a legal precedent, only binding on particular matter.
Annual income tax returns are due on following dates:
- Individual (non-provisional) tax payers – a date in November announced annually
- Individual provisional taxpayers – 31 January of the following year
- Companies – 12 months after year end
Failure to submit returns by the due date may give rise
To fixed rate penalties, as per table, based on assessed income or loss
Will be imposed monthly until non-compliance is remedied
The Tax Administration Act, 2011 (Act no 28 of 2011) came into operation on
1 October 2012.
The Act seeks to achieve the objectives of the efficient and effective collection of revenue
This Act deals only with administration and seeks to:
- Incorporate into one piece of legislation administrative provisions that are generic to all tax Acts and currently duplicated in the different tax Acts
- Remove redundant administrative provisions
- Harmonise the provisions as far as possible
The aim of the Act was to
Simplify administrative provisions as it is believed that it is easier for a taxpayer to fully comply with law they understand.
The Act also seeks to promote a better balance between the powers and duties of SARS and the rights and obligations of taxpayers and to make this relationship more transparent.
The aim of understatement penalties
Is to ensure that due care is taken in the completion of returns and to discourage intentional understatement of income.
These penalties are levied on the taxation that arose on the understated amount.
