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14 July 2005 – Tax Practitioners

Are you aware that from the 30th of June 2005 your Tax Practitioner must be registered with SARS? You can verify his registration at the Sarsefiling website. Visit www.sarsefiling.co.za and then go to Tax Practitioners.

SECTION 67A OF THE INCOME TAX ACT requires that every person who provides advice to any person with respect to any Revenue Law under the control of SARS, or completes or assists any person in completing any document to be submitted to SARS, must be register with SARS as a tax practitioner by the 30th of June 2005 or within 30 days after that person starts to provides advice or completes or assists any person in completing any document.

We have assisted tax payers on the weekend of the 1st to the 3rd of July to complete their tax returns at The Mall @ Reds. Someone told me a horrendous story about their previous tax practitioner. The story was that a specific tax practitioner always calculated that the client has to pay income tax to SARS. Further, this tax practitioner then requires that the tax payer must issue the cheque for SARS in his personal name and not directly to SARS. The client has never saw or sign any tax return. This tax practitioner then submits the client’s tax return with a tax refund to SARS. After the assessment the client gets a refund from SARS. When the client raised a query with the tax practitioner it was labeled as an overpayment of provisional tax. The result is that the tax practitioner walks away with the client’s cheque. The client eventually caught the tax practitioner by requesting information from SARS directly.

This is one story that I have heard, but I have also saw the work of some tax practitioners, who do not have experience or knowledge of any of the Revenue Laws. Unfortunately, these unscrupulous tax practitioners gave the industry a bad name.

WHY THE LEGISLATION? The reason behind the new legislation is to get rid of unscrupulous tax practitioners but also to protect the tax payer community. It is part of the preparation for the electronic submission of income tax returns. It might probably be as early as the 2006 tax year.

The current legislation held the tax payer liable for his tax affairs. At the moment the tax practitioner is in terms of the relevant Acts under control of SARS not liable for a client’s tax affairs, but the tax payer can held the tax practitioner liable in a civil case.

WHAT LESSON CAN WE LEARN FROM THIS? Always insist on signing your tax form and if the practitioner prepared a tax calculation which accompanies your income tax form, sign that document too and obtain at least a copy of the tax calculation, if a tax calculation was prepared.

PAYMENT OF TAXES TO SARS: NEVER issue any taxation cheque to any other person than to SARS and always make the cheque out to: THE SOUTH AFRICAN REVENUE SERVICE and make sure that the cheque is crossed. If you pay your taxes electronically, rather do it via the SARSefiling website than via direct EFT to the SARS bank account. If you deposit your taxation cheque at the bank or make the payment electronically make sure that the reference number on the tax form is used. If the wrong reference number is used, your tax payment will be allocated incorrectly, and this will result in penalties and interest, which again is completely unnecessary.