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MINUTES OF THE SARS NATIONAL STAKEHOLDERS MEETING HELD AT BROOKLYN ON 21 FEBRUARY 2012

ITEMS DISCUSSED

ADMINISTRATIVE PENALTIES

The South African Revenue Service (“SARS”) acknowledged the fact that admin penalties were incorrectly levied on certain taxpayers below the threshold and who were not required to submit income tax returns.

SARS noted that the requirements for submitting income tax returns as per the Government Gazette should be followed. SARS emphasised the requirement that income must be from a single source and below the taxable threshold in order to qualify. In addition foreign income and interest has to be below the threshold levels. SARS indicated that in a lot of the cases the requirements are not met.

SARS also indicated that they are not always in possession of all information in order to make an assessment and encouraged taxpayers and practitioners to rather submit returns in cases of uncertainty.

SARS indicated that they are looking into the matter. All data and returns subsequently submitted for which penalties were incorrectly raised will be rectified. A communication in this regard will also be issued.

IT14SD RETURNS

All stakeholders raised concerns regarding the difficulties experienced with regards to the reconciliation process of the IT14SD returns, for example Value-Added Tax (“VAT”) on imports and zero-rated and exempt supplies, Pay As You Earn (“PAYE”) etc.

SARS acknowledged the complexity of the return and indicated that the IT14SD reconciliation is currently only requested on a selection basis and that only a fraction of taxpayers are selected for the IT14SD reconciliation.

SARS indicated the taxpayers and practitioners should reconcile to the best of their ability and that SARS will be looking at increasing the quantum of the variance threshold and re-look at the risk assessment procedures. SARS to engage with the professional bodies in this regard.

Requests were also raised for increasing the 21 day filing requirement as it is too short. SARS to consider.

VAT REGISTRATIONS

Clarification is needed with regards to the treatment of the interim period, in instances where VAT registrations and the issuing of a taxpayers’ VAT number has been delayed, and the taxpayer has become liable for VAT. SARS indicated that once the taxpayer becomes liable for VAT in terms of the VAT Act, VAT should be raised on invoices and accounted for. SARS will consider issuing communication or an interpretation note in this regard.

Inconsistencies with regards to the documentation requirements for new VAT applications were raised. SARS indicated that the requirements are contained on the VAT 101 form and should be strictly adhered to. SARS will consider issuing a detailed document in this regard. All inconsistencies should be forwarded.

The slow turnaround time for processing VAT applications in certain instances were also raised. SARS acknowledged the fact that the Polokwane branch has been a problem in this regard and that training of staff etc. was performed. SARS to look at other branch offices based on examples.

TAX CLEARANCE CERTIFICATES (“TCC”)

All stakeholders raised concerns regarding problems experienced with the issuing of tax clearance certificates.

Concerns were raised with regards to old periods for which information is not available. SARS indicated that they cannot legally ignore non-compliance for these old periods and taxpayers and practitioners should request and submit these returns via e-filing.

Cases were also given where TCC’s were declined for taxpayers with credits on their account and without decline letters being issued. SARS explained that these cases are not declined, they just go on failed status which needs manual intervention by a SARS official. SARS will look into the matter and examples should be forwarded.

SARS urged taxpayers and practitioners to be pro-active in resolving compliance. SARS also considers the taxpayers history when TCC’s are issued or declined.

Examples of problems with regards to lost documentation experienced at the Edenvale branch were mentioned. SARS to investigate.

OBJECTIONS AND ADVANCE DISPUTE RESOLUTIONS (“ADR”)

Concerns were raised that the turnaround time for notice of objection and appeal cases are not always within the 90 day period.

SARS indicated that the period between 15 December and 15 January should not be counted as part of the 90 days due to the holiday season. SARS indicated that they are still within the 90 day period currently.

SARS indicated that there are a lot of invalid notice of appeals for which no notice of objection was received. A notice of objection should be submitted before a notice of appeal is submitted.

SARS emphasised that the ADR1 and ADR2 forms are to be used for Companies and the NOO and NOA forms for Individuals and have pointed out that tax practitioners complete the incorrect forms.

SARS indicated that taxpayers and practitioners should submit appropriate supporting documentation with notice of objections and appeals. SARS is addressing rejections where objections and appeals were rejected due to insufficient supporting documentation submitted.

All rejections of objections and ADR’s should be accompanied with reasons for the decline thereof.

MEDICAL AID CLAIMS

An increase in the number of SARS reviews on medical aid claims were noted.

SARS indicated that they are experiencing duplicate medical aid claims for claims already claimed as part of the medical aid certificate. SARS also indicated that non-allowable medical aid expenses for example non-prescription medicine, and other non sec18A qualifying expenditure, are claimed by taxpayers.

SARS is looking at improvements on the medical aid details disclosed on the certificates received from medical aids, for example details of dependents and disabled persons etc.

E-FILING AND EASYFILE

Concerns were raised on time-outs and other bulk submission problems experienced. Guidance from SARS was requested in this regard.

SARS indicated that there was a bug on PAYE credits not pulling through on IRP5’s on the IT12’s which have been fixed.

SARS also indicated that a number of cases where returns were filed electronically and assessments received manually were rectified.

It was requested that dormant companies should not submit IT returns. SARS indicated that the dormant option should be selected on returns in this regard and that all registered companies and trusts should submit returns regardless.

It was noted that the EI returns for exempt institutions were not available on e-filing. SARS to investigate.

Concerns were raised with regard to time-out limits and problems experienced with saving IT returns on e-filing. SARS indicated that they are not aware of the problem, but will investigate further. SARS indicated that returns should be saved regularly and the current time-out limit is 20 minutes.

BRANCH OFFICES

SARS raised concerns where firm messengers were registered as tax practitioners in order to act as tax practitioners at offices. SARS indicated that this is not allowed.

Complaints were raised regarding availability of meetings for tax practitioners. SARS indicated that problems are experienced with tax practitioners cancelling meetings without sufficient notice or not pitching at all. SARS is looking at investigating and following up with offenders in this regard.

No appointments should be made for collections at the branch offices.

It was mentioned that the mobile offices are still in operation and that dates and times be uploaded on the SARS website.

Complaints were raised regarding the availability of appointments at the Pretoria tax practitioners unit. Suggestions were made for overflow to other branches. SARS to consider.

NEW DIVIDEND WITHHOLDING TAX

The new dividend withholding tax will be effective from 1 April 2012. Companies need to take note of the significant data requirements. SARS indicated that comprehensive guides and frequently asked questions are available on the SARS website.

IT RETURNS

SARS requested for IT returns not to be punched when submitted manually.

IT returns should not reflect the practitioners details, but should reflect details of the client.

SARS busy with a new modernisation project on the IT14 return.

OTHER GENERAL MATTERS

SARS NOTIFICATIONS

It was requested that all audit completion and other SARS notification letters be communicated to taxpayers. SARS indicated that this is a focus of the new modernisation process of the new Tax Administration Bill (“TAB”).

TURNOVER TAX

It was mentioned that qualifying taxpayers can, as from 1 March 2012, register for both VAT and turnover tax.

DE-REGISTRATIONS

SARS indicated their awareness of issues experienced with de-registrations. SARS is also in a process of engaging with the Master’s office to try and clear the backlog.

TAX DIRECTIVES

SARS indicated that tax directives should be submitted electronically via e-filing. A 3 day turnaround time should apply. This functionality is only available to employers.

VOLUNTARY DISCLOSURE PROGRAMME (“VDP”)

SARS indicated that a significant number of VDP applications were received. In excess of 14,000 applications still have to be processed. Branch offices are currently busy capturing manual returns. The process are running smoothly and there are no concerns from SARS at this stage.

POWER OF ATTORNEY (“POA”)

SARS indicated that a POA can be printed on a firm letterhead.

Requests were received for relaxing the 2 year validity period of SARS POA’s. SARS to engage with their legal department to consider relaxing this requirement.

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