Overview by SARSyChapter by Chapter

DDESIGNESIGN OFOF TAB TAB -- GGENERALENERAL AAPPROACHPPROACH

• The core provisions required for the administration of the tax system were identified and incorporated

• A ‘step by step’ methodology followed in an attempt p y p gy pto align the structure of the TAB to the administrative ‘life cycle’ of taxpayerslife cycle of taxpayers

• The legislative style followed is a new ‘simplified’ f l i l ti iti i h t tmanner of legislative writing, i.e. shorter sentences,

shorter sections and less formalistic language

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DDESIGNESIGN OFOF TAB: MTAB: MAINAIN CCHAPTERSHAPTERS

Chapter 1 Definitions Chapter 11 Recovery of Taxes

Chapter 2 General Administration Chapter 12 InterestChapter 2 General Administration Chapter 12 Interest

Chapter 3 Registration Chapter 13 Refunds

Chapter 4 Returns and records Chapter 14 Write off or CompromiseChapter 4 Returns and records Chapter 14 Write-off or Compromise of tax debts

Ch t 5 I f ti G th i Ch t 15 P ltiChapter 5 Information Gathering Chapter 15 Penalties

Chapter 6 Confidentiality of Information

Chapter 16 Additional TaxInformation

Chapter 7 Advance Rulings Chapter 17 Criminal offences

Chapter 8 Assessments Chapter 18 Reporting of p p p gunprofessional conduct

Chapter 9 Dispute Resolution Chapter 19 General provisions

Chapter 10 Tax Liability & Payments Chapter 20 Transitional Provisions33

IINTERPRETATIONNTERPRETATION

• Interpretation• Terms used in the TAB which are defined in the tax Acts retain tax Act’s

defined meaning in the TAB unless context indicates otherwise ordefined meaning in the TAB unless context indicates otherwise or specifically defined in TAB

• Terms defined in the TAB apply to tax Acts unless the context in the tax Act indicates otherwise or if they are specifically defined in the relevantAct indicates otherwise, or if they are specifically defined in the relevant tax Act

• Each tax Act will be amended to provide that:“Any administrative requirement and procedure for purposes of the performance of any duty, power or obligation or the exercise of any right in terms of a tax Act is, to the extent not regulated in this Act, regulated by the g g yTax Administration Act”

• NB: Administrative provisions that are specific to a tax Act or the relevant tax type remain in that Actthe relevant tax type remain in that Act

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CCHAPTERHAPTER 1: D1: DEFINITIONSEFINITIONSN d fi d tN d fi d t•• New defined concepts:New defined concepts:

• Assessment > now includes self-assessment• Biometric information > provides for less intrusive datap• Date of assessment > now means date of issue of assessment and not

due date for payment• Effective date > determines date from which interest accruesEffective date determines date from which interest accrues• Official publication > clarity on what constitutes SARS’ practice generally

prevailing i.e. applicable to whole of SARS• Relevant material > means information forseeably relevant & determines• Relevant material > means information forseeably relevant & determines

what SARS may obtain by using its information gathering powers• Self-assessment > determination by taxpayer of tax payable

S i t ff > l t f f l f dit f t i i l• Serious tax offence > relevant for referral of audit for separate criminal investigation

• Taxable event > means occurrence affecting liability for tax• Tax > defined for purposes of the administration of the

TAB & includes penalties & interest

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CCHAPTERHAPTER 2: G2: GENERALENERAL AADMINISTRATIONDMINISTRATION (1)(1)• Purpose of ActPurpose of Act

• Effective and efficient collection of tax• Alignment of the administration provisions of tax Acts

Consolidation thereof into one piece of legislation• Consolidation thereof into one piece of legislation• Administration of the Act

• SARS is responsible for the administration of the Act • Under the control or direction of the Commissioner

• Application of the Act > applies to every person liable to comply with a provision of a tax Acta provision of a tax Act

• Practice generally prevailing - sources:• General ruling

I t t ti t• Interpretation note• Practice note• Public notice issued by senior SARS official / C:SARS

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CCHAPTERHAPTER 2: G2: GENERALENERAL AADMINISTRATIONDMINISTRATION (2)(2)Li it ti f d i i t tiLi it ti f d i i t ti•• Limitation of administrative powersLimitation of administrative powers• Exercise of powers or obligations by SARS must be related to & within

ambit of administration of tax Acts• Three tier decision making levels (more serious powers reserved for

C:SARS or delegated senior SARS officials)• Conflict of interest provisions > prohibit involvement in matters withConflict of interest provisions prohibit involvement in matters with

personal, family, financial etc. relationships• Identity Cards > all SARS officials required to carry card• Withdrawal or amendment of decisions > request driven• Withdrawal or amendment of decisions > request driven• Delegations must be in writing with defined mandate• Authority to act in legal proceedings > only certain officials

P d d ti f th Mi i t• Powers and duties of the Minister• Issue regulations under TAB• Appoint Tax Ombud• Above may not be delegated to Deputy Minister or DG

• Establishes Tax Ombud’s Officeax Ombud’s Office

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CCHAPTERHAPTER 3: R3: REGISTRATIONEGISTRATION• Registration requirements regulated for all taxes• Registration requirements regulated for all taxes

• Platform for single registration• Registration period of 21 business days across most taxes• Biometric information may be required e.g. VAT registration > to

counteract identity & other fraud• Obligation to inform SARS of changes in registered Ob gat o to o S S o c a ges eg ste ed

particulars to ensure SARS has current information• E.g. change in address (including physical, postal & electronic), banking

details & representative taxpayerdetails & representative taxpayer• Commissioner may prescribe additional information by notice

• Taxpayer reference number• SARS may allocate in respect of one or more taxes• Use of number compulsory in all correspondence to enable SARS to

process taxpayer information more efficientlyp ocess ta paye o at o o e e c e t y• SARS may disregard correspondence without

allocated reference number

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CCHAPTERHAPTER 4: R4: RETURNSETURNS ANDAND RRECORDSECORDS• Submission of return• Submission of return

• Obligation imposed by relevant tax Act• If imposed, form and manner of return regulated by TAB

T b it d d t b f i i l t t• Taxpayer may submit amended return before original assessment to correct errors

• Third party returnsp y• Prescribing types of information required from third parties in tax Acts

inflexible & voluminous• Information required & periods now required by public notice by C:SARSInformation required & periods now required by public notice by C:SARS

• Further or more detailed returns > may be required by SARS• Statement required regarding extent of examination reflected in

accounts / financial statements submittedaccounts / financial statements submitted• Record retention

• TAB general record requirement + record requirements in tax Acts• Manner of record keeping prescribed

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CCHAPTERHAPTER 5: I5: INFORMATIONNFORMATION GGATHERINGATHERING• Information gathering powers are substantially supplemented /• Information gathering powers are substantially supplemented /

extended to address protracted ‘information entitlement’ disputes & waste of resourcesP li d ith i t ti l ti• Powers more aligned with international practice:

• Rationale for wide tax information gathering powers = to achieve equitablelevying of taxes & discharge duties to correctly assess taxable income, revenue authority should have access to all information which might affect liability to tax

• “Information is the lifeblood of a revenue authority’s audit activities”Information is the lifeblood of a revenue authority s audit activities• Whole burden of taxation would fall only on honest taxpayers if revenue

authority had no power to obtain information about taxpayers who may be negligent or non compliantnegligent or non-compliant

• Concern about tax ‘fishing expeditions’ misplaced:• Concept applies in criminal cases > ‘fishing’ to see if case exists• Tax audits > impossible to audit all taxpayers thus

random or risk based selection oftaxpayers for audittaxpayers for audit

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CCHAPTERHAPTER 5: I5: INFORMATIONNFORMATION GGATHERINGATHERING (2)(2)• International case law:

• Australia Federal High Court “The strong reasons which inhibit the use of curial processes for the purposes of a ‘fishing expedition’ have no application to the administrative process of assessing a taxpayer to i t ”income tax.”“Clearly enough, the resources of the Australian taxation office do not extend to auditing the returns of every taxpayer even if it were thought appropriate to do so...”[Industrial Equity Ltd v Deputy Commissioner of Taxation (1990) 170 CLR 649][Industrial Equity Ltd v Deputy Commissioner of Taxation (1990) 170 CLR 649]

• Canada Supreme Court of Appeal“The Minister [of National Revenue] must be capable of exercising [its broad] powers whether or not he has reasonable grounds for believing that a particular taxpayer has breached the Act. Often it will be impossible to determine from the face of the return whether any impropriety has occurred in its preparation.” [R v McKinlay Transport Limited 47 CRR 151 (SCC) at 168]

• USA 7th Circuit Court of Appeals• USA 7th Circuit Court of Appeals“The IRS’ broad power to investigate possible violations of the tax laws is understood to be vital to the efficacy of the federal tax system, which seeks to assure that taxpayers pay what Congress has mandated and to prevent dishonest persons from escaping taxationCongress has mandated and to prevent dishonest persons from escaping taxation thus shifting heavier burdens to honest taxpayers” [USA v BDO Seidman 02 C 4822]

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CCHAPTERHAPTER 5: I5: INFORMATIONNFORMATION GGATHERINGATHERING (3)(3)N / t d d• New / extended powers:• Inspections > To determine identity of the person occupying business

premises & whether registered for taxp g• Requests for information - ambit extended to:

Identifiable taxpayers (e.g. taxable event indicates existence of person liable for tax but name unknown) & )Classes of taxpayers (e.g. taxpayers involved in certain potential tax avoidance structures)Information required for revenue estimation > SARS may request this information but failure to submit does not constitute a criminal offence (specifically excluded in Chapter 17)

• Informal examination / interview at SARS office > aim = to clarify issues of concern to render further audit unnecessary

• Search & seizure without warrant > narrow exception to warrant requirement – should inter alia assist in tax fraud & tax baseqbroadening investigations

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CCHAPTERHAPTER 5: I5: INFORMATIONNFORMATION GGATHERINGATHERING (4)(4)A dit l ti b i ifi d i TAB d b• Audit selection basis > now specified in TAB and may be on random or risk assessment basis

• Random basis:• Random basis:• Some have argued that random selection is irrational, but conducting an

audit on a random basis is regarded as perfectly rational in other countries“I it bl th ill b d t t th h fi ll l t d• “Inevitably, there will be a random aspect to those who are finally selected ... but the Commissioner will still be acting for the purposes of the Act ... [by] ascertaining the taxable income of all taxpayers.” [Australian Industrial Equity case supra]

• “Often it will be impossible to determine from the face of the return whether any impropriety has occurred in its preparation. A spot check or a system of random monitoring may be the only way in which the integrity of the tax system can be maintained.” [Canadian R v McKinlay Transport case supra]

• In the USA, the IRS is known to have a program that randomly , p g ytargets taxpayers for audit on a statistical basis

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CCHAPTERHAPTER 5: I5: INFORMATIONNFORMATION GGATHERINGATHERING (5)(5)Ri k t dit l ti b i• Risk assessment audit selection basis • Involves assessing the risk profile of taxpayers (“risk assessment”) and

then allocating resources in accordance with the risk profiles (“resource g p (to risk allocation”)

• Benefits of risk assessment:Results in more targeted audits and efficient use of SARS’ resourcesgSARS able to address emerging tax risks in real-time & provide tax certainty to taxpayers soonerQuicker guidance on tax mattersgReduces need for protracted audits (typically some years after targeted transactions occurred)Limit disputes Reduces the incidence of tax underpayments, administrative penalties and interest

• Obtaining real-time “relevant information” fromgtaxpayers is key to effective riskmanagement

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CCHAPTERHAPTER 5: I5: INFORMATIONNFORMATION GGATHERINGATHERING (6)(6)Search & seizure without a warrant• This power may only be invoked if a senior SARS official on

bl d i ti fi d th treasonable grounds is satisfied that:• There may be an imminent removal or destruction of relevant material

likely to be found on the premises;y p ;• If SARS applies for a search warrant, a search warrant will be issued; and• The delay in obtaining a warrant will defeat the object of the search and

seizureseizure.• Power is a very narrow exception to requirement that

searches & seizures occur pursuant to warrantp• Constitutional Court – held that there may be instances where

warrantless search and seizure are justified & upheld tit ti lit th fconstitutionality thereof

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CCHAPTERHAPTER 5: I5: INFORMATIONNFORMATION GGATHERINGATHERING (7)(7)

Search & seizure without a warrant• This power is consistent with that found in more than 15 other p

pieces of legislation in South Africa• SA organs of state / officials with similar powers: Competition

Tribunal; fire protection officers; forest officers; FSB; immigration officers; SAPS

• OECD tax authorities with similar or greater powers:• Tax authorities with warrantless search & seizure powers: Austria;

Belgium; Chile; Czech Republic; Denmark; Greece; Hungary; Iceland;Belgium; Chile; Czech Republic; Denmark; Greece; Hungary; Iceland; Ireland; New Zealand; Norway; Poland; Portugal; Slovenia

• Tax authorities that may enter business premises & private dwellings without a warrant: Australia; Canada; Finland; Turkey

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CCHAPTERHAPTER 5: I5: INFORMATIONNFORMATION GGATHERINGATHERING (8)(8)• Taxpayer new rights & obligations:• Taxpayer new rights & obligations:

• SARS official must demonstrate authority to conduct audit• Prior notice of field audit > at least 10 business days before audit• Taxpayers obliged to give SARS reasonable assistance during field audits &Taxpayers obliged to give SARS reasonable assistance during field audits &

execution of search and seizure warrants• Report on the progress of ongoing audit• Notification of conclusion of audit that revealed no adjustmentsNotification of conclusion of audit that revealed no adjustments• Taxpayer entitled to audit findings letter & respond in writing before

assessment if audit revealed material adjustments• Separation of audit and criminal investigation > if during audit indications of p g g

serious tax offence discovered, separate criminal investigation required with due adherence to rights of taxpayer as suspect

• Search & seizure:In conduct of search SARS must have strict regard to decency and orderTaxpayer entitled to inventory of seized materialSARS must only remove copies and not originals where possibleTaxpayer may claim for unjustified physical damage caused during searchTaxpayer may claim for unjustified physical damage caused during searchProtection of material if legal professional privilege assertedExtension of search to premises not in warrant only in narrow circumstances

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CCHAPTERHAPTER 6: C6: CONFIDENTIALITYONFIDENTIALITY• Rationale for tax secrecy:Rationale for tax secrecy:

• Constitutional rationale: protects taxpayer’s right to privacy• Tax policy rationale: to encourage taxpayers to make full & voluntary

disclosure of all relevant information for purposes of assessing tax liabilitydisclosure of all relevant information for purposes of assessing tax liability• In TAB secrecy & confidentiality provisions are:

• Aligned across taxes• More explicit as to who is subject thereto• Extended to include SARS confidential information

• Disclosure of information subject to secrecy:Disclosure of information subject to secrecy:• Only if public interest outweighs individual right to privacy• Only by High Court & criteria to consider prescribed• In the context of disclosure for non tax administration purposes disclosure• In the context of disclosure for non tax administration purposes, disclosure

is widened in two aspects:Disclosure to financial regulatory agenciesDisclosure for purposes of verification of basic informationDisclosure for purposes of verification of basic information

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CCHAPTERHAPTER 6: C6: CONFIDENTIALITYONFIDENTIALITY (2)(2)•• General prohibition of disclosure:General prohibition of disclosure:General prohibition of disclosure:General prohibition of disclosure:

• Secrecy specifically applicable to C:SARS & former or current SARS employee or person contracted by SARSSARS employees and persons contracted by SARS obliged to take oath of• SARS employees and persons contracted by SARS obliged to take oath of secrecy before commencing duties

• Information unlawfully disclosed may not be further disclosed or published, including by the media

• C:SARS may personally disclose information to counter / rebut false allegations in media in very narrow circumstances

•• SARS confidential informationSARS confidential information• Includes, for example, confidential information such as internal policies,

privileged legal opinions informant information & information that couldprivileged legal opinions, informant information & information that could prejudice the economic interests or financial welfare of the Republic

• Disclosure regulated > only permitted if public information, authorised by C:SARS access has been granted under PAIA or by orderC:SARS, access has been granted under PAIA or by orderof a High Court

• Unauthorised disclosure criminalised

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CCHAPTERHAPTER 7: A7: ADVANCEDVANCE RRULINGSULINGS

Th d li t tl l t d i th I• The advance ruling system currently regulated in the Income Tax Act and the VAT Act now incorporated in the TABTAB provisions establish framework for the system and set out• TAB provisions establish framework for the system and set out basic rules regarding:• Application process & feesApplication process & fees• Exclusions and refusals• Effect of rulings• Impact of subsequent law changes• Retrospectivity

P bli ti f li• Publication of rulings.

• Provisions also provide for specific rules in respect of:• Binding general rulings• Binding general rulings• Binding private rulings • Binding class rulingsg g

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CCHAPTERHAPTER 8: A8: ASSESSMENTSSESSMENT•• New provisions:New provisions:New provisions:New provisions:

• Original assessment: Defined term that includes 1st assessment by SARS & return which incorporates the taxpayer’s determination of the amount of a tax liabilityamount of a tax liability

• Additional assessment: New simplified grounds on which additional assessments may be issued to achieve alignment across taxes

• Reduced assessment: Clarity that reduced assessment will also be• Reduced assessment: Clarity that reduced assessment will also be issued if taxpayer made undisputed errors in return

• Jeopardy assessment: May be issued before end of tax period to secure early collection of tax at risk e g in case of dissipationsecure early collection of tax at risk e.g. in case of dissipation

• Estimation of assessment: Concept of ‘estimated assessment’ replaced with provision that original, additional or reduced assessment

b ‘b d ti ti ’may be ‘based on an estimation’• Notice of assessment: If contrary to return must include grounds• Period of limitations for issuance of assessment: Normal assessment

3 & lf t 53 years & self-assessment 5 years• Finality of assessment: Consolidated

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CCHAPTERHAPTER 9: D9: DISPUTEISPUTE RRESOLUTIONESOLUTION

N i iN i i•• New provisions:New provisions:• Burden of proof: Aligned & SARS bears burden in case of assessment

based on estimation & additional tax• Decision on objection: If disallowed must include grounds• Decision of Tax Board: Time period within which decision must be

given prescribed – 60 business daysgiven prescribed 60 business days• Conflict of interest: Chairperson of Tax Board / Member of Tax Court

must withdraw in case of conflict that may give rise to bias• Sittings of Tax Court: Generally not public but Court has a discretion to• Sittings of Tax Court: Generally not public, but Court has a discretion to

order sitting to be public on application by any person & if exceptional circumstances existO d f t i f f S AR S C tit t f d f SARS• Order for costs in favour of S AR S : Constitutes funds of SARS

• Publication of Tax Court judgments: All must be published to ensure not only SARS has benefit of unreported judgments

• Settlement of dispute: Only possible if dispute arisesafter issue of assessment

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CCHAPTERHAPTER 10: T10: TAXAX LIABILITYLIABILITY & P& PAYMENTAYMENT

N i iN i i•• New provisions:New provisions:• Categories of persons liable to tax: To simplify & clarify which persons

are liable to tax and in which capacity. Taxpayers:p y p yPersons (primary) chargeable to taxRepresentative taxpayersWithholding agentsResponsible third parties

• Security:SARS may require security to safeguard collection of tax e.g. in case of y q y g gwithholding agent who repeatedly failed to withhold / pay tax dueSecurity may also be required from any or all of members, shareholders or trustees who controls / manage the taxpayer

• Preservation of assets order:Common law remedy codified in TAB for tax administrative purposesOrder by High Court & SARS may seize assets in anticipation of ordery g y pPower available as conservancy measure for purposes ofmutual assistance in the recovery of tax onbehalf of foreign governments

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CCHAPTERHAPTER 10: T10: TAXAX LIABILITYLIABILITY & P& PAYMENTAYMENT (2)(2)• New provisions:New provisions:

• Pay now argue later: Rule that dispute (objection & appeal) does not automatically suspend obligation to pay clarified in Taxation Laws Second Amendment Act 18 of 2009 TAB provides for:Amendment Act, 18 of 2009. TAB provides for:

Suspension prior to lodging of objection possibleCollection steps by SARS prohibited during consideration of suspension request except in narrow circumstancesexcept in narrow circumstancesInstitution of sequestration or liquidation steps prohibited if disputed tax not paid & taxpayer did not get a suspension of payment obligationSARS may periodically review suspension (on a risk basis) & revoke it in theSARS may periodically review suspension (on a risk basis) & revoke it in the case risk of dissipation of assets / delaying tactics by taxpayer

• Taxpayer account & allocation of payment: TAB createsFramework for single taxpayer account with rolling balanceFramework for single taxpayer account with rolling balanceFramework for “first in first out” payment allocation rule i.e. payment may be applied to oldest debt first despite taxpayer designation

• Instalment payment agreement• Instalment payment agreement –debt relief mechanism

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CCHAPTERHAPTER 11: R11: RECOVERYECOVERY OFOF TTAXAX• SARS’ collection powers have been strengthened:SARS collection powers have been strengthened:

• In respect of repatriation of offshore assets to satisfy tax debts• In respect of personal liability of third parties who:

Assist in dissipation of assetsAssist in dissipation of assets Receive property from tax debtor for below fair market value Benefit from ‘asset stripping’ of tax debtor e.g. shareholdersPart with / dispose of the assets or money of a tax debtor contrary to a notice byPart with / dispose of the assets or money of a tax debtor contrary to a notice by SARS to transfer the assets or money to SARS

• Period of limitation on collection of outstanding tax debtsC t 30 i ti i d f t d d t 15• Current 30 year prescription period for tax reduced to 15 years

• Benefits SARS: more practical approach to debt management • Benefits taxpayer: Finality achieved within more reasonable period

• Appointment of third party to satisfy tax debts• Person required to transfer assets held on behalf of tax debtor or money,

including pension or remuneration, owed to tax debtorincluding pension or remuneration, owed to tax debtor• SARS may revise notice to enable taxpayer to pay

basic living expenses including that ofdependantsdependants

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CCHAPTERHAPTER 12: I12: INTERESTNTEREST• TAB creates framework for:• TAB creates framework for:

• Alignment of interest provisions across taxes• Compounded interestGeneral rule:• General rule:

• Interest accrues from ‘effective date’, i.e. normally the date that tax is payable under a tax Act, to date of paymentI t t t i th ‘ ib d i t t t ’ t i t f• Interest rate is the ‘prescribed interest rate’ except in respect of overpayments of provisional tax (4% points below)

• Remittance of interest discretion retained - limited to specified circumstances beyond the taxpayer’s control

• Refund interest payable by SARS: • Interest calculated from the later of the ‘effective date’ or date that the

excess payment received by SARS• Taxpayer thus normally entitled to refund interest from same date that

SARS would have been entitled to interest on unpaid tax• Some exceptions in tax Act e.g. VAT Act where interest on

refund only payable after 21 days of claim

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CCHAPTERHAPTER 13: R13: REFUNDSEFUNDS• New provisions:• New provisions:

• Refund paid into a wrong account by SARS may be collected as if it is tax > otherwise SARS only able to recover amount through protracted common law remedies such as enrichment

• A refund need not be authorised by SARS until such time that a verification, inspection or audit of the refund has been finalised

To enable SARS to issue assessment on expedited basisIssue of assessment reflecting refund amount does not mean payment is authorised Thereafter some taxpayers may be selected for refund audit & remainder will get refunds shortly after assessmentTaxpayer will remain entitled to interest from the later of the ‘effective date’ / date h h d d f f h f d b SARS fthat the overpayment was made, to date of payment of the refund by SARS after the verification, inspection or auditSet-off of refunds against existing tax debts prohibited in the case of installment

t t & d d di t d tpayment agreements & suspended disputed taxLimitation of payment of refunds if taxpayer has outstanding returns removed

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CCHAPTERHAPTER 14: W14: WRITERITE OFFOFF / W/ WAIVERAIVER OFOF TTAXAX DDEBTSEBTS

• Provisions are essentially:• A form of tax debt relief

M b ff d d d i ib d i• May be afforded to taxpayers under certain prescribed circumstances• No major changes were made to current law, except:

• Circumstances where it is appropriate to compromise a tax debt were pp p pmade less restrictive

• Some of the factors that disqualify the tax debtor from a compromise agreement removed from current law include:agreement removed from current law include:

Compromised based solely on a claim of hardship in paying the tax debt, including the need to sell a home or businessCompromise to assist a debtor who has become overcommittedCompromise to assist a debtor who has become overcommittedCompromise to save a business from failure or closureCompromise to alleviate harsh or unfair operation of a tax law in particular circumstances

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TAB PTAB PENALTYENALTY RREGIMEEGIME

TAB:Penalty RegimePenalty Regime

across taxes

A: Administrative Penalty

Targets administrative

B: Additional TaxTargets serious non-

compliance & tax

C: Criminal Offences

General offencesTargets administrative non-compliance

compliance & tax evasion

General offences across taxes

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CCHAPTERHAPTER 15: P15: PENALTIESENALTIES

• The administrative penalties imposed under the Income Tax Act now included in TAB & apply across taxesThese penalties target non compliance with administrative• These penalties target non-compliance with administrative obligation under a tax Act

• New provisions:New provisions:• Imposition of penalty mandatory (currently discretionary) > per

international models as certainty of penalty enhances complianceTargeted non compliance will be listed in public notice by C:SARS > in• Targeted non-compliance will be listed in public notice by C:SARS > in order to only target impactful / more serious non-compliance

• Percentage based penalties imposed in TAB but % of penalty (e.g. 10%) d t i d b l t t A tdetermined by relevant tax Act

• Administrative penalty for failure to report a reportable arrangement > included in this Chapter & imposed on a moreproportionate basis

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CCHAPTERHAPTER 16: A16: ADDITIONALDDITIONAL TTAXAX

• The current open-ended discretion to impose additional tax up to 200% now limited by new structure whereby percentage of additional tax will be determined by :additional tax will be determined by :

• Taxpayer’s behaviour (e.g. gross negligence), and• Other objective criteria (e.g. voluntary disclosure) in a Table

• New provisions:• Imposition triggered by an ‘understatement’ (defined term)• If understatement = ‘substantial’ (defined) behaviour irrelevantIf understatement substantial (defined) behaviour irrelevant• Methodology for calculation of tax shortfall prescribed• Onus to prove grounds for alleged behaviour on SARS

Administrative penalty & additional tax ‘double jeopardy’ avoided• Administrative penalty & additional tax double jeopardy avoided• Permanent ‘Voluntary Disclosure Programme’ > administrative penalty,

additional tax & criminal charges relief but not interest

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CCHAPTERHAPTER 17: C17: CRIMINALRIMINAL OOFFENCESFFENCES

• General statutory offences now included in TAB but tax type specific offences may remain in the other tax Acts, and include:

Non compliance offences• Non-compliance offences• Tax evasion• Contravention of secrecy provisions

Fili t ith t th it• Filing returns without authority• New provisions:

• Tax evasion “reverse onus”: Reverse onus on taxpayer under current law has been removedReplaced with ‘lesser onus’ i.e. taxpayer needs to prove that there is a reasonable possibility that he / she was ignorant of the falsity of fraudulent statement & ignorance was not due to negligence

• Decision to lay a complaint of statutory tax evasion: May only be taken by a senior SARS officialy

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CCHAPTERHAPTER 18: U18: UNPROFESSIONALNPROFESSIONAL CCONDUCTONDUCT

• No major changes to current law Condition has been added to the existing requirement that a

h i d i iperson who gives tax advice must register as a tax practitioner with SARS i.e. a person may not be registered as a tax practitioner if during the five years before his applicationa tax practitioner if during the five years before his application for registration the person has:

• Been banned or removed from a related profession or professional body for dishonesty, or

• Convicted of theft, fraud, forgery or uttering a forged document, perjury or statutory offence of corrupt activities (with sentence of 2 years y p ( yimprisonment without option of a fine)

• Convicted for any other crime involving dishonesty (with sentence of 2 years imprisonment without option of a fine)years imprisonment without option of a fine)

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CCHAPTERHAPTER 19: G19: GENERALENERAL PPROVISIONSROVISIONS

P i i d i tl b d t l d• Provisions are predominantly based on current law, and provides for:• Deadlines for payments, submission and other actionDeadlines for payments, submission and other action • Power of Minister to determine date for submission of returns and payment

of tax, interest and penalties• Appointment of public officers & default in appointment• Appointment of public officers & default in appointment• Address, authentication and delivery of documents• Electronic communication

N i i hi h t f t i l d f t i d l• New provision which caters for non-material defects in procedural requirements for the issue of documents > defects do not affect the validity of procedure provided taxpayer has effective knowledge of the notice / document and of its content

• The procedures and the requirements for the issue of a tax clearance certificate are now regulated in the TABclearance certificate are now regulated in the TABunder this Chapter

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CCHAPTERHAPTER 20: T20: TRANSITIONALRANSITIONAL PPROVISIONSROVISIONS

Provisions aimed at ensuring a smooth transition fromProvisions aimed at ensuring a smooth transition from current law to the Tax Administration Act, upon commencementcommencement

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Thank youy