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Relief coming soon for taxpayers against 'reckless' tax practitioners

Relief coming soon for taxpayers against 'reckless' tax practitioners

Date: 2012-08-15
On 5 July SARS issued the draft Tax Administration Amendment Bill for public comment, which will introduce significant assurance to the public against reckless, negligent or even incompetent tax practitioners.

The amendments seeked by SARS will introduce significant new reporting powers within the SARS already powerful Tax Administration Act. Stiaan Klue, Chief Executive of the SA Institute of Tax Practitioners (SAIT), welcomed SARS' renewed focus on tax practitioners' conduct, education, and especially their level of ethical judgment. This will protect the fiscus, but more importantly the general public.

"SARS is seeking the power to report reckless, negligent and incompetent tax practitioners to their controlling professional body", says Klue. "Once reported, the Minister of Finance will be able to appoint a panel of retired judges to discipline those reckless, negligent and incompetent tax practitioners in our profession." Taxpayers can soon expect that only registered, qualified and experienced tax practitioners offer their services - gone are the fly-by-nights.

Another interesting amendment introduced that will provide significant assurance to taxpayers is the requirement of "due diligence" practice. Klue advises that tax practitioners will soon be complelled to exercise due diligence when assisting the public in submitting a tax return. The tax practitioner will no longer be able to hide and rely on outdated tax law or be negligent or do a rush job. "Continuing professional education in taxation will also be a annual requirement. Taxation laws change annually, so updating is a must", says Klue.

Klue warns however that the term "due diligence" within the ambit of the Tax Administration Act is undefined and will expose many tax practitioners, especially those not trained as auditors. Klue advised the Minister of Finance, Pravin Gordhan, to introduce a Taxation Standards Council (TSC), similar to the Financial Reporting Standards Council (FRSC) established by the new Companies Act to issue minimum taxation standards to guide tax practitioners. It will also be helpful if the public know that there are minimum standards and that their practitioner are compelled to adhere to it, similar to auditing standards.

The SA Institute of Tax Practitioners already issued taxation standards in 2011 for tax practitioners under its control, but accounting officers and lawyers not affiliated to SAIT are not obliged to follow these standards, resulting in different practices by the various tax practitioners out there.

The Tax Administration Act, 2011, is primarily aimed at providing a single body of law that outlines common procedures, rights and remedies and to achieve a balance between the rights and obligations of both SARS and taxpayers in a transparent relationship.

Public commentary on the draft Tax Administration Amendment Bill was due to reach SARS by 31 July 2012. Public hearings will commence later in August.