Six Tips To Make Sure Your Tax Affairs Are In Order

As a taxpayer, even a simple error might lead to severe penalties. Your best option to prevent this from happening, is to clean up house. 

Take a look at  the following six steps – they are guaranteed to help you keep your name clear!



1. Have all the aspects of your tax affairs reviewed by a tax practitioner – this includes income tax, employee's tax, VAT, everything. This process will help you to see which areas are at risk and also show you the seriousness of it, which will help you decide whether you should consider voluntary disclosure to SARS.

 

2. It is imperative that you keep proper records and keep all the documents that you will need to hand in to SARS.  Don't be shy to spend money on this – going cheap might work out more expensive in the end.

 

3. Make sure you receive proper advice before taking a tax position.  When it is done, it cannot be reversed and you might not have made a properly informed decision.

 

4. Don't set your hopes too high.  Tax is hardly ever fair and SARS allows very few loopholes. Remember, if something sounds too good to be true, it usually is – even your tax position.

 

5. Don't try to cut corners by manipulating estimates and payments according to what you feel is fair. This might lead to possible investigations and payments and is definitely not worth it.

 

6. Make sure you use a tax practitioner that it compliant.  If their affairs aren't in order, chances are they won't put yours in order either.  You are still responsible for what you hand in to SARS, regardless of whether you make use of a tax practitioner.

 

Experience has proven that, no matter how hard you try, some errors might still happen.  It is important to note, though that taxpayers will no longer escape additional tax on their errors under the new TAA.  That is why the use of a tax practitioner is so strongly recommended as it helps the taxpayer limit these errors.

 

The new understatement penalty regime has swung the odds of collecting more tax revenues squarely in favour of SARS and taxpayers must be extra vigilant in their affairs. These measures might seem harsh, but there is value in remembering that SARS retains substantial powers when collecting debt that it is owed.

As the TAA is still very young, it will inevitably make amendments and additions, even while taxpayers and SARS still learn the full effect of the Act.

 

In the meantime, pay close attention to your affairs and don't bend the rules in any aspect of your tax life.

Deadline for Tax Advisers

Tax practitioners who complete tax returns for a fee or provide advice have until July 2013 to find a controlling body if they want to be recognized under the new Tax Administration Act. The Tax practitioner has to be registered with the South African Revenue Service (SARS) by 1 July this year, in terms of the act which came into effect in October 2012.

Those who do not register could face legal action.

This was implemented to shield the taxpayers from unprofessional conduct by the practitioners who could place their funds at a great risk.

There are new regulations to hold the tax practitioner liable for the advice he gives to the tax payer, and also to root out any unreliable practitioners. The regulations requires all tax practitioners to register with controlling bodies such as the Institute for Tax Practitioners (Sait), the South Africa Institute of Professional Accountants (Saica) and the Independent Regulatory Board of Auditors amongst others.

The act also allows the controlling bodies to take disciplinary action against the practitioners who fail to comply with the body’s rules.

The new legislation states that controlling bodies can now enforce minimum qualifications and continuing  educational requirements, ensuring that the public is no longer at the mercy of tax practitioners who are not up to date with the latest developments. Tax payers can now take pride in the fact that their tax advisers meet the minimum industry standard, and undertake in continual professional education and are now subject to a disciplinary code.

Unfortunately highly experienced practitioners may not be able to practice legally unless they comply with the regulations of a controlling body to which they are required to belong.

Saica welcomed the legislation saying that the tax profession should be regulated. “Saica was however not in favor of a statutory regulator that would regulate and provide services to tax practitioners” said Piet Nel, Saica’s project director for tax

An unregulated industry meant spending a great deal of time and energy to correct errors caused by unprofessional conduct of a significant number of tax practitioners, according to Adrian Lackay, SARS spokesperson.  

It is proposed that the regulation of tax practitioners be divided into two phases. The first phase will be the compulsory registration of tax practitioners with a recognized controlling body.



“The second phase will be the establishment of an independent regulatory board for tax practitioners." This will start with a review of the first phase 18 months after its implementation, said Lackay.