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The critical role of the tax practitioner

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The critical role of the tax practitioner

Legal briefs

25th May 2022

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Tax practitioners play a critical role when it comes to compliance. For any business, having to deal with SARS enquiries and audits, which are becoming increasingly more complex and common as legislation changes, can be a daunting task.

“No one without the requisite knowledge and experience should attempt to handle this alone, a simple misstatement, error, or incorrect interpretation of the law, could unwittingly lead to an investigation by the receiver or even financial penalties,” says Christine Painter, Head of Compliance, at HR and payroll software leader PaySpace.

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In addition, she stresses the need for absolute integrity in the relationship between the tax professional and the taxpayer, as this relationship is key to tax compliance. “Experts in this field need to be able to fully, and clearly outline the tax laws and what the taxpayer’s obligations are. In addition, they must accurately and honestly help taxpayers complete their tax returns, as well as other obligations including PAYE, ETI, SDL and UIF, and should it be needed, honestly and openly interact with SARS on behalf of the taxpayer.”

However, she cautions that not all tax practitioners are created equally. “According to legislation in South Africa, Section 240(1) of the Tax Administration Act requires that every individual who provides advice to another individual with respect to the application of a Tax Act, or who helps with tax returns on behalf of another person, has to be a registered tax practitioner.”

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What this means, she explains, is that the Tax Administration Act of South Africa requires any person who provides tax advice around issues such as PAYE, ETI, SDL and UIF or who assists with the compilation and submission of tax returns on behalf of another person or entity, must be registered as a tax practitioner both with SARS and a Recognised Controlling Body (RCB). 

This isn’t optional, Painter says. Section 234(c) is very clear that any person who willfully and without just cause, fails or neglects to register as a tax practitioner, is guilty of an offence, and should they be convicted, face extremely serious consequences. These can range from a hefty fine, to imprisonment for a period of not more than two years.”

In South Africa, a restriction by law is placed on the granting of opinions or interpretations when it comes to matters of tax. The same holds true in other African jurisdictions; “Tax and labour advisory services are regulated by law across the African continent. This means that consultants should not provide compliance advice related to any legislation or regulatory authority for South Africa, the rest of Africa and the Middle East unless they have registered as a tax practitioner as described above. This includes any sort of assistance with submitting tax returns or other regulatory submissions on a customer’s behalf.”

This is why having a provider such as PaySpace is so key, as it is a payroll software development house with a footprint spanning some 43 African countries. “Moreover, we develop and maintain payroll software that assists our customers in calculating gross to net (and net to gross) payroll, including all statutory declarations that have been determined by in-country taxation laws and tax authorities.”

Painter says as part of PaySpace’s software offering, the company aims to provide a platform to help its customers comply with all tax authorities and governing bodies, national funds, national pensions and health insurances, social securities, workman’s compensation, training levies, and many more.  “However, it is tax compliance that is at the heart of our offering. Extreme caution and care are taken in providing a software solution that was designed with inherent tax compliance and enhanced with enough flexibility that it can be tailored or tweaked when necessary.”

PaySpace, has been laser-focused, and has invested heavily into providing a software offering that is flexible, and can adhere with precision to the added intricacies of labour law. “We also remain fully committed to providing our customers with excellent product and technical support. Our professional and dedicated teams offer guidance on implementation design, technical and functional support, as well as core tax compliance.”

The company also ensures that it moves with the times, and continually evolves to ensure it delivers innovation within its products. “We will continue to invest in developing our products in line with regulatory requirements and best practice guidance ensuring our solutions meet our customers’ evolving needs.”

For legislative queries, consultants should recommend that customers get in touch with their preferred tax practitioner, auditor, certified business partner or accountant or visit the website of local tax authorities. “For tax return submissions in South Africa, our consultants may only assist with technical support and advice. They may help with employer reconciliation submissions (EMP501) until the point of importing the payroll file into e@syFile and with validation errors.”

In addition, consultants may advise on configuration changes once customers have confirmed with a tax practitioner, auditor, certified business partner or accountant, what the tax implications will be.

So where can customers go for tax advisory services? According to her, customers with a South African payroll will be responsible for their own submissions on e@syFile. “However, if our customers need any assistance with the submission process, or with tax and compliance, we advise them to use a tax practitioner, auditor, certified business partner or their accountant, who can also help them navigate any legislative changes and submission dates.

Painter says that should customers need further assistance on legislative or compliance-related matters, PaySpace consultants will guide them to the relevant information portals for the information they need to gain clarification and guidance.

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