With the South African Revenue Service (SARS) filing season already upon us, it is imperative that all companies understand the duties of Public Officers for tax purposes.
Section 246 of the Tax Administration Act 28 of 2011 (Act), stipulates that every company, conducting business or having an office in South Africa must appoint a Public Officer. Simply put, a Public Officer serves as the representative taxpayer for a company, meaning that this person is essentially "the face of the company" for tax purposes. Thus, all actions carried out by a Public Officer are deemed to have been done by the company.
A company is required to appoint a public officer within one month after the company begins to conduct its business or acquires business premises in South Africa. Failure to do so will result in the Commissioner of SARS designating a senior official of the company, such as a director or member (for closed corporations) or the company secretary, as the Public Officer.
Further, a Public Officer is required to be a natural person who resides in South Africa. If no senior official of the company resides in South Africa, then a suitable person may be appointed by the company or by an agent or representative who has authority to appoint such a representative.
Should a company's Public Officer resign and/or should there be any changes with regard to the Public Officer, the company must notify SARS of every change of Public Officer within 21 business days of the change taking effect. Failure to appoint a Public Officer and/or notify SARS of any changes of the Public Officer, may result in hefty penalties.
A Public Officer's duties include, inter alia:
- attending to the various tax registrations and deregistrations (where applicable) such as Income Tax, VAT, PAYE, UIF and SDL;
- the submission of all tax type returns i.e. annual and provisional tax returns, monthly employees’ tax declarations, employee reconciliations and dividends tax;
- timeous payment of tax due to SARS; and
- notifying SARS of any change of the registered particulars of the company including inter alia, registered address, year-end change, name change, verifying bank details and acceptance of notices served against your company.
Both companies and their appointed Public Officers must be cognisant of the fact that SARS has far-reaching powers to enforce the collection of the company's tax debt against another person in their personal capacity in certain circumstances, including inter alia:
- the shareholders;
- the Public Officer as a representative of the company;
- a connected person and/or a person who knowingly assists the company in dissipating its assets in order to obstruct the collection of a SARS tax debt; and
- a person who controls or is regularly involved in the management of the overall financial affairs of a company.
The Act further states that a Public Officer is responsible for all acts, matters, or things that the Public Officer’s company must do under all tax Acts, and in case of default, the Public Officer is subject to penalties for the company’s defaults. Additionally, section 155 of the Act, read with section 184 of the Act, provides that a representative taxpayer is personally liable for tax payable in the representative taxpayer’s representative capacity, if, while it remains unpaid (i) the representative taxpayer alienates, charges or disposes of amounts in respect of which the tax is chargeable; or (ii) the representative taxpayer disposes of or parts with funds or moneys, which are in the representative taxpayer’s possession or come to the representative taxpayer after the tax is payable, if the tax could legally have been paid from or out of the funds or moneys.
As noted above, for all intents and purposes, a Public Officer is a representative taxpayer of the company, and thus, can be held personally liable for the outstanding tax debt of a company. However, should a Public Officer be held personally liable for a company's tax debt, he or she is entitled to recover the amount paid to SARS from the company. Alternatively, the Public Officer is entitled to retain an amount equal to the amount of taxes paid from assets, including money, in their possession, or that will come into their possession at any stage.
In conclusion, the appointment of a Public Officer is specifically prescribed in the Tax Administration Act and he or she represents the company for all tax matters. The role of the Public Officer is thus of extreme importance.
Written by Justin Minnaar, Candidate Attorney, and Jana Botha, Tax Consultant, Baker McKenzie, Johannesburg