TAXPAYERS can look forward to a more user-friendly and unambiguous Income Tax Act, according to a draft law released by the South African Revenue Service (Sars) at the weekend. The new draft legislation is in line with plans for a new social security dispensation, expected next year.
“The draft Tax Administration Bill is the first step towards the rewrite of the Income Tax Act. It assists in a rewrite by dividing the work into more manageable parts, as the administrative part of the (legislation) comprises about 25% of the act,” said Kosie Louw, Sars’ chief officer for legal and policy affairs.
He was speaking at a public meeting on the Draft Tax Administration, Customs Control and Customs Duty Bills.
The Tax Administration Bill incorporates into one piece of legislation certain administrative provisions which are duplicated in the different tax acts.
These include the objection and appeal procedures, search and seizure provisions, and provisions relating to secrecy and collection processes.
“The aim of the new bill is to provide a single body of law that outlines the common procedures, rights and remedies of taxpayers. It also seeks to achieve a balance between the rights and obligations of both Sars and taxpayers in a transparent relationship,” Louw said.
Finance Minister Pravin Gordhan said taxpayers and Sars should work towards a new spirit in the consultative process. After 10 years the spirit may have become too adversarial, he said. “The challenge is whether ... both parties can be frank with each other,” Gordhan said.
“The bill is intended to reduce the compliance burden on the taxpayer,” Louw said. “We followed a step-by-step approach in an attempt to align the structure of the bill to the administrative ‘life cycle’ of the taxpayer.” For instance, the bill proposes the introduction of a framework for the single registration of taxpayers of all tax types.
Billy Joubert, a tax director at Deloitte, said: “This is a good thing, since it facilitates the tax administration process. It should enable Sars to more readily assess the audit risk of a taxpayer.”
Some of the bill’s practical consequences include: a single taxpayer account with a rolling balance; a mechanism for the approval of instalment payment arrangements; new payment allocation rules; and the calculation of interest across all tax types on a compound basis.
The bill also contains rules governing the rights of Sars, which have been extended in certain respects.
The new bill is available for comment until February 26 .
