South African Revenue Service. Picture: THE HERALD
South African Revenue Service. Picture: THE HERALD

The South African Revenue Service (SARS) has proposed shortening the annual filing season in 2018 by almost a month.

Tax practitioners and industry bodies expressed concern about the pressure on taxpayers and tax practitioners to meet the new deadlines. Late submissions of tax returns are subject to penalties and interest.

Indications are that SARS wants to have more time to conduct audits and verifications after the closing of the filing season and before the start of the December holidays.

The motivation behind the proposal seems to be that the short period between the November deadline and the holiday season affected audits and verifications and the resultant refunds being completed and issued timeously.

SARS declined to comment on the proposal, saying it was still only being discussed and that the agency was therefore not in a position to comment or provide details.

SARS has held a meeting with recognised controlling bodies such as the South African Institute of Tax Professionals (Sait), the South African Institute of Chartered Accountants (Saica) and the South African Institute of Professional Accountants (Saipa) to explore the possible change.

Malebo Moloto, tax technical adviser at Sait, says a shortened filing season will particularly affect small to medium-sized practices whose client bases include mainly nonprovisional taxpayers, as well as clients with VAT, Employer Annual Reconciliation and other nontax deadlines.

The change will affect mainly nonprovisional individual taxpayers who earn a salary and who do not have additional income sources such as interest or rental income.

Those nonprovisional taxpayers who have filed manually will now have from July 1 to September 21 to file their returns.

Sait members indicated in a survey that shortening the filing season would add strain to SARS branch offices, which are already inundated with queues of taxpayers trying to submit on time.

Some Sait members suggested opening the annual filing season in June instead of July each year. Others felt SARS should introduce the change only for the next filing season in order to give taxpayers and their practitioners enough time to prepare.

The annual filing of submissions starts in July and stretches until the end of January.

Companies and individuals who submit through SARS’s electronic filing platform or at a branch must do so before October 31 (if the proposal goes ahead). Provisional taxpayers who file electronically will still have until the end of January.

TaxTim director Marc Sevitz says practically, taxpayers will have three weeks less to file their returns, making the filing season only four months.

The more time for SARS should ideally mean that taxpayers who are audited or have refunds issued will have their cases resolved before mid-December, says Sevitz.

"Unfortunately, if they are unable to do that, and the season has been made shorter, there could be further erosion of trust between the taxpayer and the revenue authorities," he warns.

Recent changes at management level, notably the appointment of seasoned SARS official Mark Kingon as acting commissioner, have boosted confidence that they will be able to deliver.

Sevitz says it does mean, however, that more people will visit a SARS branch in a shorter period of time. "This means more stress for taxpayers, but the proposed trade-off is a quicker audit and refund turn-around time."

Faith Ngwenya, technical executive at Saipa, says the institute does see the benefit in changing the filing season.

"We are not opposed to the actual change, it is just the timing where the announcement of the change and the implementation is in the same year when the change is affected."

She says the fact that the announcement comes just a few months before the start of the filing season is problematic for the industry.

Tax practitioners have already prepared their schedules with the filing deadline for non-provisional taxpayer of the end of November in mind. SAIPA also recommended bringing the start of filing season forward rather than simply shortening it.

Employers have to complete their annual reconciliations by the end of May. Many tax returns are prepopulated with the individual’s IRP5 documents. Financial institutions have to issue investment certificates before the start of filing season.

There are instances where individuals are not provided with their income tax certificates until deep into the filing season. In some instances, there are errors which need to be corrected by employers.

Saica has expressed concerns about the prejudice against taxpayers if these certificates are not issued in time or the corrections are not done timeously.

SARS has allowed time for comments or submissions until 23 May.

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