Ignore Tax Administration Act at your peril

Procrastination is something that comes naturally to taxpayers. Ignore the problem and hopefully the South African Revenue Service (SARS) will forget about it.

This used to be quite effective, but the new Tax Administration Act now makes it the worst course of action for taxpayers.

Every tax nightmare has a potential remedy in the act. They take the form of procedures that bind both the taxpayer and SARS. And no deals can be struck without the procedures being followed to the letter.

Even if SARS is obviously wrong, taxpayers wishing to dispute a SARS assessment have to object timeously, in the correct manner and within the prescribed time.

In cases where taxpayers have objected correctly, they cannot sit back and wait for an outcome. An application has to be made for the postponement of payment. Failure to apply for a postponement of payment triggers SARS into pursuing court orders, attaching assets, taking garnishee orders against the taxpayer, and more.

But even the postponement of payment can have nasty implications. The act makes it almost impossible for SARS to waive interest charges if the taxpayer is wrong.

On June 5, SARS released a 93-page “short guide to tax administration”. It is a distinct improvement on trying to read the act and will make a good basic set of notes for Tax 101 students at university. But it remains intimidating for the man in the street.

We now have 13-million registered taxpayers in South Africa. That is one in four South Africans. Nearly everyone in formal employment is going to land up as a taxpayer and have dealings with SARS.

The basics of tax administration are an essential life skill. We include sex and religion in life orientation at schools, so perhaps a short course on tax would be relevant.

Another alternative would be a series of simple YouTube video tutorials dealing with the most common tax issues.

Originally published in the Sunday Times: Money & Careers Tax Talk column.

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