Tax Practitioner Connect Issue 34 (July 2022)

SARS Tax Practitioner Readiness Programme

In the June 2022 edition of the Tax Practitioner Connect, the SARS Tax Practitioner Readiness Programme was introduced. This programme is effective from 1 July 2022. This means that any individual who wishes to register as a tax practitioner, is required to complete this programme and successfully complete the assessment. To supplement this programme (in addition to the material placed on the SARS website and SARS YouTube TV Channel), SARS conducted two virtual sessions on 28th and 29th of June.  

The virtual sessions were well received with over 300 individuals attending the sessions.  Comments from participants included the following:

  • “Well presented programme”
  • “Informative”
  • “Innovative presentation”
  • “Good learning experience – time well spent”

SARS is currently working on the FAQs to address the questions raised during the sessions and will publish the answers on our website. SARS has scheduled additional virtual sessions as follows:

  • Session 3: 26 July 2022
  • Session 4: 30 August 2022
  • Session 5: 27 September 2022

Any person who wishes to register for this programme is encouraged to access learning material and the assessment through their RCB. If you have missed communication on this programme, please see the June TPC newsletter.

SARS 25th Anniversary

In the June issue of Tax Practitioner Connect, we reflected on the legislative journey that SARS has undertaken with tax practitioners to develop the regulatory regime that governs tax practitioners. The legislation in Chapter 18 of the Tax Administration Act provided the broad framework.

The current registration model is one of co-regulation between Recognised Controlling Bodies (RCBs) and SARS.  When the model was operationalised eight years ago SARS introduced the following:

  • Tax practitioner dual registration process which requires registration with a RCB and SARS
  • Regional and National Operational meetings where RCBs can notify SARS of issues – mainly operational – that are pain points for their members.

While the above matters deal with methods introduced to provide clarity and certainty, while making it easy for taxpayers and traders to comply with their obligations a complaints mechanism that deals with unprofessional conduct by tax practitioners was introduced. SARS has also implemented section 240(3)(d) of the Tax Administration Act, by deregistering non-compliant tax practitioners.

Individual Filing Season 2022/2023

Charging of Contingency Fees

July marks the beginning of individual filing season. The services of tax practitioners are often sought by taxpayers at this time.  It should be noted that SARS prohibits tax practitioners from charging contingency fees calculated as a percentage of the anticipated tax refund due to the taxpayer for the submission of tax returns. This poses a potential moral hazard.

Mandela month

Article on Ethical Dilemmas for Tax Practitioners

As July is Mandela Month, it brings to mind the lessons that the first President of democratic South Africa taught us.  He spoke about the importance of people conducting themselves with “integrity, morality and consistency”.

SARS has observed instances where tax practitioners behave unethically to promote selfish interests rather than adhering to the integrity clauses that they commit to, with their Recognised Controlling Bodies (RCBs).

It is essential that tax practitioners reflect integrity and honesty when representing taxpayers.  This is described within the Code of Conduct and all tax practitioners are expected to adhere to these codes. Tax practitioners are expected to operate in ethical ways despite the pressures that may be felt from their companies or from taxpayers, or their own financial interest. Tax practitioners are also expected to provide value to their clients by ensuring that they are fully compliant rather than submitting false tax declarations that result in taxpayers paying less tax than they are obligated to.  

This fine balance for the tax practitioner was explored in a recent study reported in the 2020 Journal of Business Ethics, by Professor of Accounting, John Hasseldine. The results of the study discussed in the article,  The Ethics of Tax Practice | UNH Today   showed that a firm’s client advocacy statement affected ethical practice. For example, a factor like pleasing taxpayers as part of retaining their business, could have negative implications for tax submissions.

The Asian Review of Accounting dated 21 September 2010 also did a study on ethical practice of tax professionals in Australia.  They found that there were issues that led to ethical dilemmas for tax practitioners. Two groups, being individual tax practitioners and tax practitioners working for firms, were the subjects of the study. There was a significant difference between the two groups regarding “loophole seeking”. Tax practitioners working for firms were more inclined to look for loopholes to lower the tax liability than the individual tax practitioners.  It also noted that tax professionals are largely seen as a homogenous group yet those in big firms may be influenced by a factor like the pressure to retain the taxpayer/client.

It is essential that tax practitioners maintain a high level of integrity, despite the pressures to do otherwise.  The words of Nelson Mandela when he said that “it is never too late to do the right thing.”  is important as it reminds us not to be tempted to ignore doing the right thing when representing the taxpayer’s affairs to SARS.

What’s New

Legislative Changes

Please take note of the following legislative changes:

Section 13quat – extension of the sunset date of the incentive by another two years to 31 March 2023
Section 12J 3 (c) – Clarifying administrative provisions of Venture Capital Companies (VCC) tax incentive regime. Code 4054 will be limited to the deduction of R2.5 million on assessment
Section 18A requirement changes. Required to submit reporting data to SARS from 2022 year of assessment
Section 10(1) (o)(ii) – Qualifying criteria for S10(1) (o)(ii) exemption relating S8A/S8C gains excluding dividends is reinstated to the ITR12 return
Paragraph 13 of the First schedule – Record retention period will be adjusted to give the farmer the option of going back to claim the deduction on the re purchased stock. Paragraph 131A prescription period will be extended to six years and Paragraph 131B prescription period will be extended to 11 years.

New Scam

It has come to our attention that there is a new scam being perpetrated.  We urge you to ensure that you take all the necessary precautions when interacting with SARS.  Also note that SARS will correspond directly with taxpayers or tax practitioners and not through a third party. For more information see Scam 318 Standard Bank’s SARS Invoice.

SARS also publishes newsletters for the SMME and Government segments.

Click here to view a complete list of the Connect Newsletters.

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