The South African Institute of Tax Practitioners

The South African Institute of Tax Practitioners The SA Institute of Tax Practitioners - "A Haven for Tax Professionals"

Professional Membership Resources and Benefits

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As a member of the Institute we have an extensive range of resources, services and benefits available exclusively to you. Below is a comprehensive list of these resources and how you can access them - valued more than R18 500 per annum! Please note you must be logged

in to gain access to these exclusive benefits.

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Membership of the SAIT provides the following benefits to its professional members:

Status as Commissioner of Oaths
Professional designation and recognition
Local and international professional recognition as South African SAIT tax professionals
Reciprocal benefits with international tax professional bodies, including Australia, UK, Ireland, US, Canada, Netherlands, Nigeria, Ghana. Tax technical assistance, guidance and advice
Bi-monthly tax journal
Latest case law summaries
Weekly e-newsletter
Daily news feeds on iPhone, iPad
Online professional profiling on the Institute website and on Tax Who's Who SA
Setting pre-eminent standards for tax professionals' education and training
Assistance with quality, affordable and discounted CPD (Continuing Professional Development)
Updates on changes in tax legislation
Regular TaxCasts
Significant discounts on tax publications
Business alliance offerings and discounts
Daily SARS updates and alerts on changes impacting tax professionals
Representation and lobby on behalf of members with SARS and Government
Building the brand of SAIT members nationally and internationally
Representation with other relevant stakeholders impacting SAIT members
Networking opportunities
Advertise for free on the career centre
Regional and online forums to meet and interact with fellow members and interest groups

In addition, the following online membership benefits and resources are available:

Dynamic, professional online profile
Personalized URL to market your services and unique experience on the website of SAIT
Unlimited online content management /storage to either share with others or keep private
Join and network with professional special interest / specialist groups
Connect your personal or company Facebook, Twitter, LinkedIn or other social networks to your profile, and share industry content more virally
Create and maintain your own 10 page website, and link it to your personailzed URL
Online messaging tool to email (send/receive) other SAIT members and SAIT Office Bearers
Manage your connections and interact with them privately with easy online communication tools
Online membership information and membership management, with invoices, payment method, transaction history available in your private profile
Manage personal and professional information and edit / update your own profile anytime, anywhere
Beneficial discounted rates for events and online store purchases
Online CPD management, with automated CPD allocation / certification for accredited CPD events, surveys, quizzes
Manage what content you receive with personalised preference settings, favourites, RSS feeds, and content subscriptions
Dynamic communication and collaboration tools, such as Forums and Blogs, with rich interactive features to allow you to contribute, vote, rate, share industry knowledge

24/10/2012

2012 Tax Statistics: Less is more

There are only two mistakes one can make along the road
to truth; not going all the way, and not starting.

Buddha

On Monday SARS released the 2012 Tax Statistics bulletin. The bulletin provides an overview of tax revenue collections and tax return information for the 2008 to 2012 fiscal years. The report contains some impressive figures.

According to the report over the last 18 years SARS has made tremendous progress in raising the levels of tax compliance and in broadening the tax base. The number of registered individual taxpayers increased from 1.7 million in 1994 to more than 6 million in 2009/10. This number increased to 13.7 million individuals by 31 March 2012 due to a policy change that registered all individuals in the country who are formally employed.

Revenue growth in the country has increased progressively over successive fiscal years from R113.8 billion in 1994/95 to R742.65 billion 2011/12. This represents total growth of almost 550% since 1994, at an average rate of 11.6% per year.

According to a Business Day report SARS believes that the statistics showed the effects of the country's progressive tax system, which ensured that lower-income earners paid less tax than high earners.

In 2011, the top 9.7% of assessed taxpayers were liable for 57% of personal income tax, whereas 42.4% of assessed taxpayers earning less than R120 000 only contributed 3.3% of the assessed tax. 221 corporate taxpayers with taxable income in excess of R200 million were liable for 50% of the company tax assessed in South Africa. However, only a third of assessed companies declared taxable income, the rest reported losses or zero taxable income.

In contrast to these impressive figures the latest International Finance Corporation (IFC)-World Bank 'Doing Business' report, which was issued on Tuesday, saw South Africa fall to 39th place out of 185 economies. The report is now in its 10th edition and measures business regulations especially for SME's across 185 economies. One of the main findings of the report was that, unsurprisingly "Smarter business regulation supports economic growth. Simpler business registration promotes greater entrepreneurship and ?rm productivity, while lower-cost registration improves formal employment opportunities. An effective regulatory environment boosts trade performance."

South Africa's 39th position is a decline compared to our 2011 position.The overall ranking is a composition of various subcategories and includes: starting a business (53th), dealing with construction permits (39th), getting electricity (150th), registering property (79th), getting credit (1th), protecting investors (10th), paying taxes (32th), trading across borders (115th), enforcing contracts (82th) and resolving insolvency (84th).

It is characteristic of high income countries to have simple and inexpensive regulatory processes combined with strong legal institutions.

From these statistics it is evident that our economy is horribly skewed. A small number of people pay most of the taxes. It is these same people that are the industrious part of the population yet they are also subject to complex and expensive regulations.

The figure that is most disappointing is that South Africa only boast 2 263 persons who earn more than R5m a year. This represents less than 0.005 percent of our population. If most taxes are paid by high income earners then to get more taxes we need more high income earners.

President Zuma recently proposed a "pay freeze" on executive pay. Many economists ditched this idea as it would result in an estimated R5-billion dip in fiscal tax revenue.

The equation is simple: less (but appropriate) regulation means higher income. Higher income means more taxes.

Yours truly
Stiaan Klue

09/10/2012

PAY LESS TAX - SUPPORT BUSINESS RESCUE

Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed.
Every morning a lion wakes up.
It knows it must outrun the slowest gazelle or it will starve to death.
It doesn't matter whether you are a lion or a gazelle.
When the sun comes up, you better start running.

- Thomas L. Friedman, The World Is Flat

In August low cost airline One Time filed for business rescue.

Business rescue is a novel option enabled by South Africa's new Companies Act, 2008. Chapter 6 of the new Act allows a business that is deemed to be "financially distressed" to apply for business rescue. In short this means that creditors finance the business turn-around by accepting a postponement in repayments. Business rescue is therefore a very private matter between the parties involved.

Management, creditors, and employees jointly show commitment to the company as they believe that its long term survival will benefit all the parties involved. If the business rescue process is unsuccessful, the normal liquidation process will follow. A liquidator will sell all of the assets and pay outstanding liabilities. This usually results in job losses and creditors receiving a fraction of the original debt. Business rescue was designed to try and avoid both events - save jobs and ensure creditors receive their fair share.

From a tax perspective, what is unique about business rescue is the fact that the process is not financed by the taxpayer but by creditors. It is recognised that the problem is industry-specific, and that the parties directly affected , should solve the problem. Potential losses are contained - creditors, employees and the company will have to reduce their demands for salaries, interest payments and benefits and invest these savings in the turn-around strategy. A job in hand seems better than no job at all.
In September, state-owned SAA requested what amounts to a R5 000 0000 0000 bailout. It seeks a government guarantee for obtaining loans to finance its operations and purchase new fuel efficient planes.

SAA and One Time are both companies registered in terms of the new Companies Act 2008. This means that business rescue can be applied by both. However, SAA opted for a "government bailout" as opposed to the One Time option of filing for business rescue.

With the financial crises of 2008 the term " government bailout" was popularised in the United States. In essence it means privatising profits and socialising losses. The taxpayer - an unrelated party to SAA (Pty) Ltd is on the line for the R5 000 000 000 "bailout". Employees, creditors, and management are not asked to "take one for the team" and reduce their salaries, interest payments or benefits.

Why should Joe the plumber, Sam the builder, or Jane the teacher allocate a portion of their salaries in potential higher tax collections to fund employees, creditors and managers of SAA?

Yours truly
Stiaan Klue

17/09/2012

Tax practitioners contributing to the African Renaissance

"If the law supposes that," said Mr. Bumble,…
"the law is a ass-a idiot. If that's the eye of the law,
the law is a bachelor; and the worst I wish the law is that
his eye may be opened by experience-by experience."

Charles Dickens, Oliver Twist, 1837

The African Renaissance concept, popularized as part of the post-apartheid intellectual agenda, was first articulated by Cheikh Anta Diop in a series of essays beginning in 1946, which are collected in his book "Towards the African Renaissance: Essays in Culture and Development, 1946-1960". Diop wrote the series of essays as a student, charting the development of Africa.

Among other things the African Renaissance is a philosophical and political movement to end the violence, elitism, corruption and poverty that seem to plague the African continent, and replace them with a more just and equitable order.

Taxation As A Renaissance Catalyst

One of the most pressing issues on the African continent is the dependence on foreign assistance and indebtedness. As Africans we need to focus on boosting tax revenues through broad-based taxation. Experience has shown that this will lead to more predictable revenue collection and meet the developmental agenda of the continent. It will also help to ensure that aid-funded investments are sustainable, and prepare for the gradual exit from aid in the long term.

Most taxable capacity in Africa tends to be concentrated in a small group of taxpayers. As a result individuals and companies with power and influence deploy aggressive tax planning techniques. However, the majority of taxpayers do not have the means to reduce their tax liability. In addition their taxable capacity is low and costly to collect, especially in rural areas.

The result: the middle class and mid-sized companies carry most of the tax burden.

The 21st Century has begun with some serious challenges facing the global community, this contributed to a significant change in the role of professionals, especially in the current difficult economic environment. It is in this environment that Africa faces its own special challenges regarding governance and sustainable state building, of alleviating poverty, sustainability and development through improved tax compliance.

Taxation is central to the development agenda of African states. Resource mobilisation is the financial bedrock on which sustainable, long-term development is built. The raising of tax revenues is arguably the most central activity of any state. Revenue from taxation is what sustains the existence of the state, and provides the necessary financial resources for social and economic infrastructure. Taxation is the administrative heart of government and provides the funds to supply public goods and implement effective regulation.

The law (and tax practitioners) should not be an ass

African legislators should draft tax laws that alleviate the tax burden of the middle class.

As African tax professionals we have a duty to contribute to the development of the African continent. We should therefore build relationships with all stakeholders and contribute to the efficiency of the tax collection system.

It is incumbent on tax professionals to take responsibility for developing a healthy relationship between their clients and revenue administrations, and for providing the necessary technical guidance and support for the creation of a satisfactory tax compliance culture.

We should be proud to participate in the African Renaissance.

Yours truly
Stiaan Klue

24/08/2012

MARIKANA

"The fault, dear Brutus, is not in our stars,
But in ourselves, that we are underlings."

From Julius Caeser (William Shakespeare)

On 16 August 34 striking miners was shot dead by the South African police force. An event likened by some to the Sharpeville events of 1960. Others lauded the police actions. Local and international media covered the event extensively as this event may seriously tarnish South Africa's status as the "rainbow nation". Judge Ian Farlam, retired Judge of the Supreme Court of Appeal, has been appointed by President Jacob Zuma to chair a commission of inquiry to establish the facts about what happened in Marikana. The role of Lonmin, NUM, AMCU, and the police will be scrutinised.

All South Africans should treat the shootings with respect and mourning. This was truly a devastating event.

SAIT shares the views expressed by the Law Society.

In a press release issued 17 August 2012 the society stated that: 'The LSSA extends its deepest condolences to the families of the deceased and hopes that the many wounded will recover. These workers have been the victims of an escalating breakdown in conflict resolution, particularly in the mining industry, brought about by all the stakeholders who placed vested interests over the lives of workers. This breakdown is symptomatic of our society and body politic in South Africa,'

As tax practitioners working within a society that has been scared by violence, vigilantism, corruption, xenophobia, disrespect for the law, greed for power, influence and wealth, we need to rekindle the spirit of former President Mandela. We should answer hate and violence with grace and forgiveness.

We have come too far to see South Africa fail. Our future is not predetermined. We do not need to make the same mistakes as other failed states.

Yours truly
Stiaan Klue

18/08/2012

The Road Not Taken

I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I -
I took the one less travelled by,
And that has made all the difference.

Robert Frost

August 16 marks the day our National Planning Minister delivered his National Development Plan to Parliament. The plan was positively received by stakeholders and hailed by the media as a "plan for all citizens".

The plan's main objectives are to eliminate poverty and reduce inequality by 2030. These objectives should be supported as South Africa is in dire need of change.

What we all should realise though is that these objectives will not come cheap. Indeed even the Minister was quick to state that "we must accelerate the pace of change, work harder and better to move toward this vision".

"Work harder and better"

It is fair to say that this call to action should apply equally to citizens, taxpayers, business people, and professionals, members of trade unions, civil society and government officials.

What is it that each of these groups should do to make the plan work?

Business owners should pay their fair share of tax and should not employ questionable and aggressive tax planning techniques to avoid or evade tax. The Christo Wiese affair was widely reported in the media. According to reports he owes R2 billion in taxes and SARS announced that it had uncovered 9 300 South Africans, most of whom have wealth in excess of R75m and who had earned more than R7m last year, had failed to properly pay their fair share in taxes. These 9 300 individuals are potentially responsible for a R50bn tax shortfall.

Tax practitioners should ensure that tax returns are completed accurately and honestly. We cannot be seen to be associated with misleading information. Government employees and workers generally should commit to higher productivity and lower absenteeism.

And taxpayers generally? Is there something that they can do to make the plan work? Should they commit to paying more taxes? It is clear that the plan will need an increase in government funding and spending. National treasury's medium-term budget forecast indicates that tax collections from personal income tax is set to increase with R40 billion, a 14.7% increase from the previous year. For 2014/2015 the percentage increase is 15%. Economists and tax specialists agree that an increase in personal income tax is likely. However they are concerned about the taxpayers' ability to pay more. Toll roads, food inflation, consumption taxes, electricity increases are becoming overbearing. Can we really expect taxpayers to do more and fund ever increasing salary costs of government departments with no improvement in service delivery?

Like the traveller in Robert Frost's poem South Africa is about to enter a new path. Will we do so as equal partners carrying the same burden? Or will we regret the road not taken?

10/08/2012

Tax practitioners - No more mister nice guy

I used to be such a sweet, sweet thing 'Till they got a hold of me.
I opened doors for little old ladies,
I helped the blind to see.
I got no friends 'cause they read the papers.
They can't be seen with me and I'm getting' real shot down
And I'm feeling mean.
No more Mister Nice Guy

Alice Cooper

It is commonly accepted that professionals have a duty to exercise a level of care, skill and diligence that is commensurate with their standing in society. In addition to these higher rules of conduct a professional is also bound by contract law to perform tasks competently.

In common law jurisdiction it is accepted that a professional owes this duty to his client. In the famous Duke of Westminster (1936) case the court held that "Every man is entitled, if he can, to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be".

Many tax professionals may therefore argue that "it is the ethical duty of a tax practitioner to offer their clients all legally available options to reduce their taxation liabilities". However the dark side of this argument is that it may lead to a proliferation of aggressive tax planning.

In response regulators develop general anti-avoidance provisions and demand that tax practitioners be subjected to regulation.

Section 241(2) of the Draft Tax Administration Amendment Bill amends the Tax Administration Act, 2011 and introduces significant new reporting powers to SARS in order to combat reckless, incompetent and corrupt practices performed by tax practitioners. Tax practitioners that do not perform their work with the required due diligence will be subject to disciplinary action by their controlling bodies. In addition SARS will be able to prosecute tax practitioners that knowingly provide false or misleading information to SARS.

The guiding principle for these regulations is the duty to "know your client". South Africa first adopted this approach in the financial services industry and this principle is fast becoming prevalent throughout professional practice. Accountants are held liable in terms of the Companies Act if they knew or ought to have known that an adjustment will cause the financial statements to be misleading, The Consumer Protection Act introduces the concept of "strict liability". The "strict liability" regime mandates that the supplier of the goods or service be held liable irrespective of whether the harm caused to a consumer resulted from any negligence on the part of the supplier. If a person claims for damages, the service provider or supplier will have to prove that they are not responsible.

The "know your client" and strict liability regimes will require a fundamental shift in the way we, as tax practitioners relate to our clients. In the past tax practitioners, unlike auditors and accounting officers, were not subject to regulation. Regulation has now also reached our shores.

Are we business advisors or tax practitioners? Are we accountants or tax specialists? Are we part of the family or are we professionals? Clients very often view their tax practitioners as part of their business, as a staff member or "go-to guy" if things get though when the "taxman cometh".

This will have to change and the relationship should become much more formal and disciplined. Working papers will have to be reviewed and expanded. Quality control policies and procedures will have to be implemented and monitored. Are we ready?

SAIT is the only professional/controlling body that has issued taxation standards. These standards are similar to audit and review standards as required in the Companies Act 2008. Adherence to these standards will ensure that our members comply with the "due diligence" requirements as set by SARS.

Yours truly
Stiaan Klue

03/08/2012

Tax and Audit - How best should they be regulated

The Draft Tax Administration Amendment Bill provides for the establishment of "recognised controlling bodies". The Bill requires that all persons that give tax advice or completes tax returns register with such a body. The controlling body will have to ensure that its members comply with a relevant code of conduct and should also enforce this code by maintaining an investigations and disciplinary process.

The objective is for all tax practitioners to belong to a recognised tax practitioners' association or fall under the authority of a directly relevant statutory regulator, such as the Independent Regulatory Board for Auditors (IRBA).

The inclusion of the IRBA as a controlling body for tax practitioners is interesting.

Parliament has delegated certain functions to the IRBA via the Auditing Professions Act 2005 (APA). The Auditing Professions Act, 2005 (APA) limits the powers of the IRBA to the regulation of auditors. Thus the IRBA issues auditing standards, enforces a code of conduct for auditors and keep a register of auditors. The original raison d'etre of the APA was to protect the public interest by regulating registered auditors only. Parliament in 2005 accepted this position based on extensive research and consultation by Dr. Len Konar and as a result of the Nel Commission of Inquiry into the Affairs of the Masterbond Group and Investor Protection in South Africa.

It is still a hotly debated point whether auditors should be allowed to perform non-audit work for audit clients. Providing the IRBA with an additional function to regulate their member's tax work will surely add to this debate.

How will the ability of the IRBA to regulate auditors be affected if they were to be appointed a controlling body for tax purposes? Will the APA have to be amended to allow the IRBA to develop tax standards for auditors?

In the case of registered auditors - do they give tax advice or complete tax returns as registered auditors or as tax practitioners? Will they be required to register with IRBA as tax practitioners? Will the APA be amended to allow tax practitioners to register with IRBA as non-auditors?

SAIT has been a home for tax practioners since …. Our members include a wide array of professionals - persons qualified a auditors, lawyers, financial planners, accountants and others all find the services offered by SAIT compelling.

The reasons for this are that we have a specific tax focus. We are the only institute with a code of conduct specifically drafted to address tax work. We are the only institute that requires a tax clearance certificate as a precondition for membership. We provide a weekly tax focussed newsletter, a monthly magazine and our disciplinary process is chaired by a retired judge of the high court.

We take tax seriously and believe that tax is a public interest issue. Tax advice should not be clouded by a lack of independence on the side of the practitioner or by a lack of focus by a controlling body.

Yours truly
Stiaan Klue

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Krugersdorp
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