The number of South Africans using the services of tax practitioners is increasing.
A good relationship and effective communication between taxpayers and tax practitioners, as well as knowledge of tax requirements — on both sides — are among the factors that are likely to contribute towards better tax compliance in SA, according to a recent study.
The study was conducted by Prof Gerhard Nienaber for his PhD thesis and submitted to Norton Rose Fulbright and the SA Institute of Professional Accountants’ (SAIPA) tax thesis competition.
Thomas Höppli, an economic research analyst at SAIPA, says the study confirms the fact that tax practitioners play an important role in influencing the behaviour and attitude of their clients on tax compliance, and vice versa.
The number of South Africans using the services of tax practitioners is on the increase. Not only because tax legislation has become more complicated but short-changing the taxman — even if it’s not on purpose — could become a costly exercise when penalties and interest on outstanding taxes and the effort to sort out mistakes come into play.
Also, since 2011, the Tax Administration Act requires tax practitioners to be registered not only with the SA Revenue Service (SARS), but also with a recognised controlling body, such as SAIPA or the SA Institute of Tax Professionals (SAIT) or the SA Institute of Chartered Accountants (SAICA).
“For taxpayers, this gives them assurance that their tax practitioner fulfils minimum qualifications, experience and continuing professional development requirements and abides by a code of ethics and conduct. The regulatory framework thereby ensures that taxpayers receive better, more consistent tax advice,” Nienaber says.
Exactly how much compliance or the lack thereof with local tax laws is related to the tax advice from tax practitioners is still unclear. But the fact remains that the buck ultimately stops with the taxpayer, who will be held responsible for non-compliance or understated taxes. So pleading ignorance is no excuse and taxpayers must remain actively involved in the process and ask all the uncomfortable questions.
It is also the responsibility of professional bodies to ensure their members stay abreast of all tax-related developments to sufficiently assist the layman — and the taxman for that matter. SARS should also be open and clear on its systems and processes in order to enlighten taxpayers. And as Nienaber says in his thesis: “This will help to streamline tax collection and eliminate unnecessary noncompliance and consequent penalties.” All involved parties need to take responsibility for the tax system to run smoothly and ethically.
That being said, history has taught us that it is impossible to eliminate all unsavoury elements within an ecosystem. For an ordinary taxpayer, expensive litigation in SA courts is not always an option but recognised professional bodies all have codes of conduct and disciplinary procedures if practitioners step out of line.
The Tax Administration Act also seeks to promote a better balance between the powers of SARS on the one hand, and the rights and obligations of taxpayers on the other, with the creation of an independent ombudsman.