SARS now outsourcing Debt Collection

In an attempt to recover outstanding debt worth over R15-billion, the South African Revenue Service (SARS) has outsourced confidential taxpayer information from its debt book to selected service providers. (See notification letter). The outsourcing project, which was implemented on 1 June 2016, appointed the following service providers: CSS Credit Solutions, NDS Credit Management and Trifecta Capital.

The unpaid taxes include Pay As You Earn (PAYE) and Unemployment Insurance Fund (UIF) and Skills Development Levy (SDL) contributions which have remained outstanding for longer than four years by private companies and individuals.

We strongly urge you to contact our office for assistance should SARS or any of their appointed debt collectors contact you regarding an old debt.

Contact us here now

Nwanda Internal News (August 2016)

DAYSAwesome Reward goes to:

Work performance:

  • Shane Short – Exceeded expectations at the Master’s Office

Welcome back to Samantha Goodrich:

We are pleased to welcome Samantha back to the office after 4 months maternity leave.

Internal promotions:

Congratulations to the following staff on their promotion:

  • Dean du Toit, Accounting Manager
  • Proffessor Mafela, Audit Manager – Erleen Coetzees Team
  • Daniel Adlam, Junior Manager – Bob Borrills Team

CTA Students:

The following staff will vacate the office at the beginning of September to write the CTA examinations.  All  the best and make us proud and most importantly – yourself!

  • Iris Janse van Rensburg
  • Sifiso Tshabalala
  • Daniel Adlam
  • Teboho Magodiele
  • Sadiya Mansoor
  • Esmerelda Lottering

Farewell to a staff member:

We bid farewell to the following staff member:

  • Nicole Pretorius

We wish her success in her future endeavours.

How to increase your exam performance:

Tests and exams are an inevitable part of learning. They’re not there to trip you up, but to measure how well you have understood the subject. Even if you know the content well, there are ways to help yourself perform better on the day.

Some people thrive on exams, others are less fortunate. A disciplined approach will make your task easier, and hopefully – improve your results.

Here are some tips that you can try to help you improve your exam performance.

Before the exam

  • Your success starts before you even sit down for the exam, so ensure that you have enough rest the night before. Don’t cram up to the last minute, as that only adds to your stress
  • Look at previous tests, and analyse how well you did, and where there could be room for improvement
  • Always arrive early for an exam. Arriving late will just add to your stress levels
  • Arrive with a good attitude: be positive, smile, and be confident
  • If you suffer from exam anxiety, read our article on how to manage exam stress.

During the exam

  • Read the directions carefully, and slowly. You don’t want to make a careless mistake
  • Read through the whole exam before answering, to give an overall picture of your task
  • Answer easy questions first; that way you won’t get stuck on a tricky question and run out of time
  • Look for the key words in the question: there are usually one or two that will give you a clue
  • Don’t leave when you’re finished; review all your answers and double-check that you’ve answered all questions correctly
  • Double-check your spelling, punctuation and grammar.

After the exam

  • Be positive: think about those tasks you know you performed well on
  • Avoid a ‘post mortem’. Discussing with other students how well you and they did, or did not do, will only drag you down
  • After the exam, don’t go back to study or work right away: give yourself some time off to relax doing something you enjoy.

Successful High Energy Training with Colin Hall:

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Transactions required to be reported to SARS in terms of the Tax Administration Act

Certain transactions are required to be reported to the South African Revenue Service (‘SARS’) as and when entered into (section 37 of the Tax Administration Act, 28 of 2011 (‘the Admin Act’)).  These are referred to as ‘reportable arrangements’, and qualify as such when an ‘arrangement’ (defined as including any transaction, agreement, scheme or understanding) either meets one of the criteria set out in section 35(1)(a) to (e), or if specifically listed in a public notice issued by the Commissioner for SARS.  This article is concerned only with the former.

Failure to report a ‘reportable arrangement’ will result in a monthly penalty being levied against non-compliant taxpayers ranging from between R50,000 to R300,000 per month (section 212), for up to 12 months.  The purpose for requiring taxpayers to report certain transactions is obvious:  to allow SARS to monitor transactions on an ongoing basis which it considers to exhibit potential traits of tax avoidance.

Section 35(1) determines that arrangements which exhibit any one of the below criteria qualify as a reportable arrangement.  These are arrangements which:

(a) contain provisions in terms of which the calculation of interest, finance costs, fees or any other charges is wholly or partly dependent on the tax treatment of that arrangement;

(b) have any of the characteristics contemplated in section 80C(2)(b) of the Income Tax Act, 58 of 1962, or substantially similar characteristics (which include round trip financing, involving an accommodating or tax indifferent party in the arrangement or if the arrangement contains elements which offset or cancel each other);

(c) give rise to an amount that is or will be disclosed by any participant as:

  1. )  a deduction for purposes of the Income Tax Act but not as an expense for accounting purposes; or

(ii) revenue for accounting purposes, but not as gross income for purposes of the Income Tax Act;

(d) do not result in a reasonable expectation of an accounting pre-tax profit for any participant; or

(e) result in a reasonable expectation of an accounting pre-tax profit for any participant, but which is less than the value of the tax benefit to that participant if both are discounted to present value at the end of the first year of assessment when the tax benefit is created.

Irrespective of the above, even if an arrangement would qualify as a reportable arrangement in terms of the above, section 36 of the Admin Act lists various criteria which, if met, would render an arrangement an ‘excluded arrangement’ whereby such transactions need not be reported to SARS.  Moreover, in terms of the public notice issued by the Commissioner on 16 March 2015 in Government Gazette no. 38569 as Notice 212, a transaction would not be reportable in terms of the above criteria only if the tax benefit arising from the arrangement for all persons involved would not exceed R5 million.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.

SARS prescription

Imagine the following scenario: a taxpayer named Andrew is on his annual vacation for four weeks. On the fifth day of his vacation, he is lying carefree in the sun with his toes wiggled into the warm beach sand.  A thought crosses his mind: perhaps he must check his email for a change.

Fast forward eight hours: Andrew logs into his email. He gives the emails in his inbox a quick scan. Suddenly his stomach cramps. His heart beats faster. His hands start to sweat. His eye caught an email from SARS. Andrew opens the email and then the attachment reluctantly. The attachment contains a letter from SARS stating that they are going to re-assess his income tax for a specific tax year. The assessment for that particular tax year has been issued more than four years ago. Can SARS do this?

To be subjected to the prescription (or re-opening) of an assessment that has been finalised a few years ago already, is something taxpayers don’t even want to contemplate. However, in terms of the new Tax Administration Act, 28 of 2011 (TAA) SARS may go back more than three tax years into the past, prescribe and re-assess a tax return but only if the Commissioner is objectively, based on the facts, satisfied that both the following statutory requirements are met:

  • There was fraud, misrepresentation or non-disclosure of material facts.

“Fraud” is defined as an unlawful act committed with the intention of misleading another person. The misleading information must cause the other person to act differently than they would have acted if they were not given the misleading information.

The legal meaning of “misrepresentation” refers to a false statement made by a person, regardless of whether the statement is made negligently, fraudulently or innocently. Misrepresentation does not include the expression of an opinion or an interpretation of law.The taxpayer must have made a positive statement which contained one or more facts that were untrue.

Note that innocence cannot be pleaded as an excuse for misrepresentation. Taxpayers thus have to make sure about the content of any statement they make regarding their tax affairs before making such a statement.

“Non-disclosure” means failure to reveal a fact if there is a duty to disclose it. Whether or not there is an intention to conceal it is irrelevant.

  • The above fraud, misrepresentation or non-disclosure of the material facts was the direct cause that the taxpayer had been assessed for a lower amount of tax than if the taxpayer had disclosed these material facts referred to in section (i) above, to SARS.

There must be evidence of a direct link between the non-disclosure or misrepresentation of the material facts and the taxpayer paying too little tax. If the fraud, non-disclosure or misrepresentation of the material facts did not cause the taxpayer to be liable for less tax than he was assessed for without the material facts, the second requirement listed above is not met and SARS shouldn’t be able to apply this section of the TAA.

Generally the onus of proving that income is not taxable or that an expense is tax-deductible rests with the taxpayer. However, if SARS wants to apply the provisions of this section of the TAA, the onus of proving that the above requirements are met, rests with the Commissioner.

It seems that if the fraud, non-disclosure or misrepresentation of material facts did take place but did not cause the taxpayer to pay less tax than if SARS had been in possession of these material facts, and SARS would have assessed the taxpayer in exactly the same way as with the original assessment, despite SARS becoming aware of the material facts now, SARS cannot claim that the under-assessment was due to that fraud, non-disclosure or misrepresentation of the material facts.

If SARS wants to issue an additional assessment on the basis of requirement (i) above but requirement (ii) is not met, the taxpayer can deal with this situation using the objection and appeal provisions available.

In the light of SARS’s tools to go back and prescribe assessments for old tax years, it might be prudent to keep tax records for longer than the required retention periods prescribed by SARS.

Reference List:

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.