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The Tax Administration Bill |
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Tax Matters
by Andrew Duncan
- The purpose of the Tax Administration Bill (TAB) is to bring together all the administrative powers, rights and obligations of SARS and at the same time specify the protections available to individual taxpayers. In the fullness of time it is intended that each taxpayer will have one tax number only in respect of all taxes across the board, i.e. PAYE, VAT, customs duty or whatever.
- Provision is made for a tax ombud but unfortunately the office is not vested with any enforcement powers as against SARS. SARS’ information gathering powers are substantially extended to the extent that SARS can search and seize documents without a warrant provided a senior SARS official is satisfied that it is justified. There is a specified audit selection basis which will either be on a risk assessment or a random basis. Taxpayers will be entitled to an ‘audit findings letter’ as to the status of the audit.
- Taxpayers will be happy to know that in conducting searches SARS must have strict regard to “decency and order”. The taxpayer may also claim for unjustified physical damage caused during a search! There are new confidentiality provisions providing for a taxpayer’s right to privacy but specifically providing that SARS may disclose personal information to counter false allegations made in the media! There are various dispute resolution provisions plus SARS’ collection powers have been strengthened by an entitlement to repatriate off-shore assets to satisfy tax debts.
- A whole new penalty system has been introduced to provide for an administrative non-compliance penalty and an understatement penalty which targets serious non-compliance and tax evasions. A permanent voluntary disclosure program is introduced to enable taxpayers to regularise their tax affairs without payment of any penalties but subject to payment of the tax that would have been payable together with interest. This is certainly a welcome step. The message is clearly to get your Returns in early and accurately!
A New Dividend Tax Regime As from 1st April 2012 there will be a whole new system of taxation of dividends. In essence individual shareholders not being corporate entities will be subject to a 10% dividend tax which will be withheld by the company paying the dividend. The 10% tax will be calculated on the dividend paid and not, as is the case under STC, as a tax on the dividend after deduction of the STC. Foreign dividends will be subject to tax if the South African resident holds less than 10% at a rate of 25% of the marginal rate, i.e. up to 10%. If the holding is more than 10% then there is no tax. That tax is only payable as a provisional tax payment and is therefore an advantage over local dividends where tax is deducted upfront!
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