New tax regulation will spruce up the industry
Pravin Gordhan made it sound as if rogue tax practitioners were a dime a dozen in his budget speech last year, when he declared that they owe over R260m to the government in their personal capacity.
Perhaps there are a lot of tax-dodging practitioners lurking in the hallways at SARS, but the picture is a little more complex than one might think.
Stiaan Klue, chief executive of the SA Institute of Tax Practitioners, says that imminent regulation that will force tax advisers to comply with the Tax Administration Laws Amendment Act No. 21 of 2012 will be a good thing for the industry. But the aim is not to persecute practitioners but in large part to “save them from themselves”, as many are working without tax qualifications.
Tighter regulation
The reality is that there was previously no obligation for tax practitioners to continue their education when they were operating within an unregulated space. The industry was fairly lenient towards the roughly 17 000 tax practitioners in South Africa without tertiary or further higher education qualifications.
Now, however, legislation will demand that all tax practitioners be registered from 1 July 2013, when the new tax season starts, and this means they will need to satisfy the regulator that they are safe to practice.
There are broadly two categories of practitioner that will need to undergo competency assessments to comply with the legislation.
There are older practitioners who perhaps retired and set up consultancies post-retirement, relying on matric and many years of experience to get by; and then there are practitioners who qualified more than five years ago and have not updated their knowledge since (as we know, rapid and dramatic changes to tax laws are common).
“The regulator has no desire to strike anyone off the roll.” says Klue, “We don’t want to set people up for failure. But from 1 July 2013 SARS will have a mandate to report practitioners to their controlling regulator for gross negligence or recklessness, so it is better for practitioners to submit to being assessed.”
What will this entail?
There is still time for practitioners to brush up on their knowledge and pass the competency assessments, says Klue.
The South African Institute of Tax Practitioners (SAIT) was appointed in November last year as the National Board Examination Adjudicators for tax professionals and its tax refresher courses are set out here
Information about the CPD Competency Assessment (2012 Amendments) can be found here
Weeding out the unscrupulous
The alternative to continuing their professional education is potentially being struck off the roll by the controlling regulator, says Klue, so practitioners need to take this seriously.
The tax industry has had a murky reputation thanks to rogue advisors and it is anxious to clean up its act. This legislation will weed out the unscrupulous and encourage the negligent to sharpen up (“The issue with tax is, we don’t always know what we do and don’t know until we test ourselves,” says Klue).
The FAIS Act made a big difference by weeding out dishonest financial service providers (or what a colleague has called ‘the Lance Armstrongs of the profession’!), so the tax fraternity looks forward to seeing practitioners belonging to a controlling body and getting their own tax affairs in order.
Editor’s thoughts:
SARS has indicated that it wants to close loopholes in terms of tax evasion – tax arbitrage opportunities have made it easy for companies to play the system. This, too, will be addressed this year in the interest of improving compliance and taking action against practitioners who commit fraud. Do you think SARS will successfully crack down on tax dodgers in 2013? Comment below or email [email protected]
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