MINUTES OF THE SARS NATIONAL OPERATIONAL STAKEHOLDER FORUM HELD ON TUESDAY, 8 JULY 2014 FROM 10H30 TO 13H30 AT BOARDROOM 3, LE HAE LA SARS MINUTES

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1 NATIONAL OPERATIONAL STAKEHOLDER FORU INUTES OF THE NATIONAL OPERATIONAL STAKEHOLDER FORU HELD ON TUESDAY, 8 JULY 2014 FRO 10H30 TO 13H30 AT BOARDROO 3, LE HAE LA INUTES RCB REPRESENTATIVES REPRESENTATIVES APOLOGIES 1. Nokuthula Ntshele (ACCA) 1. ark Kingon (Chairperson) 1. Natalie Zimmelman (AATSA) 2. ichael Dyke (CSSA) 2. Benjamin de Klerk 2.Ehsaan Nagia (IACSA) 3. Joel Wolpert (CSSA) 3. Anton Fisher 4. Jane O Connor (IRBA) 4. Natashia Juta 5. Iqbal Ganie (LSSA) 5. Cameron Peterson 6. Colin Wolfsohn (SAICA) 6. Prineven oonsamy 7. Somaya Khaki (SAICA) 7. Cecile Bothe 8. Linda athatho (SAICA) 8. Deepa oodley 9. Eric Berman (SAICA) 9. Narcizio akwakwa 10. Piet Nel (SAICA) 10. Renee agazi 11. Ettiene Retief (SAIPA) 11. Ntshavheni athele 12. Keith Pieterson (SAIPA) 12. Vlok Symington 13. ahomed Kamdar (SAIPA) 13. Zebeda amaila 14. Faith Ngwenya (SAIPA) 14. ohammed Desai 15. Sharon Smulders (SAIT) 15. Gerhard Keyter 16. Erich Bell (SAIT) ITE WELCOE AND APOLOGIES 1. The chairperson opened the meeting and welcomed everyone present. All attendees introduced themselves. CONFIRATION OF THE AGENDA 2. The agenda was confirmed with the following critical and urgent matters added: RCBs requested an update on Admin penalties. A communication went out on how admin penalties will be phased in, however clarity is needed on how other than for personal income Page 1

2 tax the penalties will be implemented. The current gazette only covers individual tax returns confirmed that due notice will be given on any changes to the process. RCB issues o We currently have registered tax practitioners o tax preparers o currently working with the LSSA to ensure their data is uploaded onto the systems by Friday, 11 July o RCBs were reminded that the manual process to upload data is still available to them to do 1 on 1 uploads. - There seems to be a delayed up take from tax practitioners with regards to the reregistration process; - is aware of the extensive marketing which was done by most of the RCBs around the re-registration process; - Individuals who have not followed due process are seen as non-compliant; o There seems to be a perception that the shift with efiling (the process for the authority to be able to file) caused some frustrations; o acknowledged some of the challenges caused by the system however, have not rolled out any other forms other than the ITR12s in terms of the tax preparer, o If a tax payer registered with the old id and now have a new id, mismatches are created on the system and the tax payers will be required to go to the branch to authenticate him/herself. o efiling is not matching to the new information captured at the branches as these operation are done on two different systems not talking to each other currently. o The tax payer will need to go into efiling and set himself up on a new profile with the new id to resolve the problem. o Tax practitioners are to ensure that their RCB also have their new id to match them on the information the RCB will be sharing with. o A communiqué and guide to be sent to all RCBs and tax practitioners to communicate the process and systems changes as shared by by Friday, 11 July o The guide to include information on how tax practitioners can move clients from an organisation s profile onto their individual tax practitioner s profile. o Where a tax practitioner is non-compliant in terms of the tax clearance, RCBs are to mark as no on the file or exclude them from the uploaded file shared with. o The shared access guide to be updated to guide where tax practitioner gives access to tax payers to access their efiling profile and where tax payer wants to give access to tax practitioners. to develop FAQ. o Different between tax practitioner and tax preparer is that a tax practitioner will be able to do a lot more tax work than a tax preparer, tax preparers are not members of any of the RCBs, they also are not allowed to charge a fee for any tax work done. o To verify registration details of a tax practitioner, tax payers are to access the link where they will be able to confirm their registration. to share a communiqué on the verification process with all RCBs. o RCBs reported that the contact centres are giving out new tax practitioner numbers where tax practitioners have not as yet been verified by RCBs. This is not according to protocols, RCBs to share examples. will investigate. Page 2

3 o Other problems experienced where once a tax practitioner is activate and when trying to file, the tax practitioner gets a message saying they are not linked that tax payer. advised tax practitioners to activate themselves as a registered user under that tax payer s profile examples to be shared with. o Temporary status of RCBs - All RCBs given temporary Controlling Bodies status the effective dates will be different for all RCBs. - atter to be addressed offline. RCBs RCBs Filing Season Update: There are currently returns submitted - The majority of these done on efiling ; - with ± done at our branches - These stats are aligned to last year s figures 4. ATTERS ARISING FRO PREVIOUS INUTES 4.1 Senior Official List The list is in the process, it has not been signed of; previous list is out, however it has not been signed off as yet. Awaiting new list, the list does not include name, only position titles, it will be published once signed off and 5.18 Appointments at branches and single registration and other registration issues The issue is around appointment lead times being too long, also that this process varies from region to region, currently experiencing problems where we get no responses to s requests. RCBs recommended use the same system currently in use by the Pretoria office. RCBs reported that Tax practitioners are turned away from some of the offices; it appears that there is no SOP for scheduling of appointments. confirms the variations in turnaround times regionally. The bigger regions are a bit of a challenge to meet expected turnaround times. Issues to consider is the reasons for some of the appointments, experience is that tax practitioners are clogging the meeting process where self-help channels are in place. RCBs asked to advise tax practitioners to use self-help facilities. requesting tax practitioners only to come to branches for highly technical matters. These appointments should not be used to drop off documents. RCBs advised to use the dedicated and faxing solutions. Ensure use of the correct address when submitting these documents. The PCC address is a dedicated channel just for tax practitioners, where a case number is issued immediately, there is a dedicated staff contingent manning these solutions just to deal with tax practitioners queries. Where clients require proof of submission, the return from this dedicated address is proof enough for any follow ups with branches or contact centres. In terms of larger volumes of documents to be submitted for audit cases, tax practitioners are advised to interact directly with that auditor. For desk audits, ZIP files to be used and submitted via the PCC addresses. Linking the issues to the Polokwane issue under 5.17 branches are walk in channels, documents are not to be couriered or sent via registered mail to branches. Page 3

4 To assist with this issue, will furnish the RCBs with the postal addresses for the centralised processing units as branches are not drop off points for correspondence. Coming back to appointment issue Tax practitioners still feel that the 8 working days waiting period to get an appointment is still too long. to consider introducing a process, where members of RCBs are forced to use electronic means available to them. Just over the last week, 20% of calls to the tax practitioners call centre were for tax numbers, another 20% was for statements of accounts that are available on efiling. to consider empowering tax practitioners on the full capabilities of efiling through a FAQ, an end to end guide or workshops. A proposal was made for to consider pop-up advertisements on the functionalities of efiling when logging into your efiling profile as there might be a risk that tax practitioners do not read any of the guides and continue to flood the contact centres and appointment schedules. On the issue where TCCs are declined, where registered particulars differ (the name), tax payers can now change the TCC particulars as long as they capture the correct name. Through the RAV01 it is easier to make the necessary changes; registration should be much easier as it can be done online as long as the main entity is registered. If income tax is registered, the tax payer can now register for VAT and PAYE online and do not need to go into a branch office. The turnaround times for the issuing of VAT numbers are almost hourly. For companies with branches where the main entity is not registered for tax you would still be required to go into the branch. On the organisational profile, if the entity has not been linked to one product tax payers have to go through the branch. On the issue of appointments, appointments are not always honoured or cancelled. RCBs recommend that persons regularly defaulting on appointments should be reported to their RCBs. The Cape Town office has taken an approach where a 3 times in succession defaulter is not allowed an appointment for the next 3 months. Other regions to consider adopting this approach Time allocations for appointments branches make appointments based on the agenda items for the meeting or the type of queries. RBCs are required to remind members to share the reasons for appointments upfront as this will ensure proper scheduling and resource allocation. Where appointments are made, and finds the practitioner does not have an active PRN on the system the tax practitioner is required to verify membership, in instances where they cannot verify, refers them back to their respective RCBs to verify their status facilities This item has been covered under item efiling timeouts RCBs reported they are still experiencing time outs when capturing information on Single registration form and objections. RCBs have not been raising the problem Page 4

5 with and have tried to find ways to work around the time outs problem by continuously saving captured data. committed to investigating and providing feedback. 4.5 Notifications from - to provide feedback on the issue raised around the additional assessments without notifications being sent to tax practitioners. - The ITA34 does tell you what has been added back. The RCB experience is that the exact amount is not always added back. - Reasons for assessments - Letter from does not provide reasons for assessments - In instances where tax practitioners have been requesting reasons for assessments, the letters coming back from does not provide any reasons, but instead informs the tax payer to follow the objection route. It seems to be happening with ITA34s. The letters seems to be coming from Assurance Audit. This seems to be happening across the country. RCBs to share examples of the requests and the responses from on these requests. committed to investigate as the matter needs to be explained in law. - On the issue of requests for corrections on trusts should come out around October this year. The trust return has been signed off, very similar to previous form but extremely complex due to abuse in this area. Notice of objections will be properly rolled out at the same time as well as audit cases on trust. - notifications not always sent to tax payers can however verify that notices are going out via s or sms according to the system implemented on the 1 July. s seem to be going into efiling profile but not into the mailbox. currently investigating and will provide feedback. - The administrative penalty statement is not available currently. It has been logged on the modernisations agenda for development. committed to keeping RCBs informs of developments within this area. 4.6 Trust returns on efiling On the issue of trust registration where the trust have duplicate numbers, the contact centres are referring tax practitioners to the aster of the High Court. CIPC does have duplicate numbers; is working with the aster of the High Court to resolve issue. RCBs asked to share examples of cases where the tax practitioners have been informed that they cannot have a trust registered until the issue is resolved. 4.7 Developments on Easy File currently investigating the feasibility of developing the easy-file system, there is currently nothing more to report on this issue. 5 NEW AGENDA ITES / RCBs RCBs 5.1 Provisional tax taxable income understated - The meeting was reminded of the 14 day rule in law. - Basic amounts are not applicable if below R1m; however, the interpretation note seems to suggest it s possible to revert to the basic amount. 5.2 Basic amounts on forms This was an issue Pre 1 July no longer an issue, the RCBs were asked to refresh their data. Page 5

6 5.3 Single registration linking of existing VAT and PAYE registration numbers will be linking the profiles as part of the single registration process. These developments are done through a bite size exercise due to complexities and risk factors. 5.4 Taxpayer identification Request not supported. There are unique identifiers in the back end known to. These are not to be shared outside of. 5.5 COID This has been raised previously. is in discussion with them. There are two challenges here, the biggest challenge being the base on which COID is premised and the way the rate of tax is dependent on an actuarial valuation of risk. There currently is no base for a link with UIF, PAYE and SDL as there are substantial differences. might consider this in the future but not at this stage as it would require significant changes. 5.6 Old Returns sitting with huge volumes and is trying to find a way to get an affidavit from the affected parties to close the cases. There are very old returns, some dating back as far as 1986 to is looking at a pragmatic approach to resolve the issue. 5.7 RCBs not sharing information receiving some complaints from tax practitioners that information shared via their RCBs for their attention is not disseminated to them. RCBs confirmed all releases from are released and shared with all their members. A proposal was made relating to guides that should consider issuing information in point form via the RCBs. Working through these guides might be seen as time consuming and cause confusion. RCBs reported that some of the guides are a duplication of sections in the returns, not adding any real value nor creating understanding. The ITR14 guides were given as an example. committed to investigate and improve where possible. RCBs were asked to put forward proposals on changes to be affected to the guides and the issue to be raised with the policy and procedures team. 5.8 Escalation of issues to the Tax Ombuds office appealed to RCBs to exhaust all internal remedy processes (SSO; Branch anagers and regional escalation lists) before logging matters with the office of the tax ombudsman. RCBs / Section 98.1d allows in a specific circumstance to override the prescription rules. Its application is quite difficult as prescription does not disappear. It is not a cure (no objective logged) where the correct processes have not been followed. might have to clarify this in the legislation in the future. 5.9 PAYE Journals There are various reasons for this. investigation and feedback. RCBs to share examples with for RCBs 5.10 IT77C The form will be done away with, and the RAV01 will automatically register the company. The RAV01 will be utilised for the process Guides Page 6

7 The meeting agreed that it will ensure the list as proposed is dealt with on the website. RCBs to note no longer publish pdf guides with exception to certain legal areas with all other publications published on the web in HDL as it helps with visually impaired tax payers. The new Dispute Rules will be published on Friday, 11 July Printing of returns on efiling It is possible to print returns as long as the wizard is completed. It does not allow for the printing of blank returns. It however gives a message that the form is for information purposes only Requests for supporting documents on efiling The system does give it immediately, audit review letters are sent instantaneously, company assessment not given until financials filed Bank account verification The statement that is asking all taxpayers to verify their banking details is not true. Husband wife - Husband and wife married in community of property has no barring; this is essentially a 3 rd party account in so far as is concerned, the rules relating to 3 rd party accounts apply. - Nedbank Corporate Saver is an account management functionality for clients money invested in their names. RCBs advised to select the other option on the return. - Non-AVS banks will have challenges with in validation. Any bank not using the auto-verification service with will face challenges. Investec rolling out AVS in September Banks currently using the AVS is Capitec and the major 4 banks E-Toll Invoices - Not to be dealt with at this meeting. - argues that invoices are legitimate. - The issue sounds like an issue for OUTA and will not be entertained by by entering into a dispute with government on E-tolls efiling This is an old on-going request. It is on the to do list, however not a priority at this stage. to provide a simplified guide on how to remove clients from an efiling profile. Tax practitioners are reporting that their clients are receiving requests to remove clients from their profiles, however when confirming with their clients, their clients are unaware of the requests as it was not sent by them. RCBs mention that quite a few cases have been reported. Also, if requests are denied the requestor has the power to override the response. to investigate and to provide feedback Polokwane Branch RCBs to note: - The branch is a walk-in channel, therefore they do not accept any post (registered or couriered) - Registered mail has to go via the CPOs will distribute the addresses for all the CPOs with the minutes. - Polokwane is a co-located branch (with audit and other divisions) hence information needs to be clearly marked. - obile offices Page 7

8 o The whereabouts of the mobile offices is advertised on the website o These offices can also be tracked via a GPS tracker. o obile services are mainly targeted at individual tax payers however if a tax practitioner needs assistance on transactions that can be dealt with by the mobile office, they will assist as per the normal branch office. o Effective from this tax session, mobile units will be able to change banking details, upload supporting documents and issue TCCs. o currently have 12 mobile units. o Nine are operational currently and three are being upgraded Single registration and other registration issues If a tax practitioner has 1200 clients, the tax practitioner will not be required to go to the branch, except for re-registration or new registrations. RCBs were reminded that single registration can be done via efiling provided that the primary product and entity is registered. - Vat Registration on going concern o Currently no escalations coming through o Requirements have not changed o RCBs to share examples o to re-iterate current processes to ensure compliance. o On release of the new Section 23, requirements can be updated ADR meeting RCB to share the case number for the case as referenced in the agenda for investigation Changing details - Currently a challenge - CIPC is giving a new number when converting from a CC to a company. - (Leon Weder) will take the matter up with CIPC VDP requests for supporting documents This seems to be a national complaint and was raised at the previous meeting. RCB clarified the issue as follows: - VDP does not ask for any supporting documents in the ordinary sense - Applicants are asked to submit returns on which the default has been disclosed - is currently dealing with the VPD1 applications. - Tax payers had two years to get their affairs in order, hence the shorten time frame to submit documents. - Theoretically, there is currently 24 cases left of the VDP1; these are where the VDP applicant for some or other reason have been unable to sign the VDP agreement. - There is currently a backlog for VDP2 applications as VDP1 and 2 was run parallel. - The VDP2 turnaround times of 183 days is hoped to stabilise to between calendar days and this is expected around October to November RCBs asked to take cognisance of the fact that not all VDP applications are completed by tax practitioners, at times attorneys are consulted due to the client privilege clause; the attorney would complete the applications with tax practitioners only brought in to file the applications. - response to this is that it can unfortunately not accommodate this relationship and linkage as it is for this reason that advise applicants when Page 8

9 making the applications to file returns as soon as possible. Whilst VDP is linked to the return, the system might charge penalties, however once the assessment is issued and the VDP agreement is concluded an adjustment to the assessment is done should then reverse all charges Call Centre has an escalation process in the contact centres; if functionally the contact centres cannot detail with the issue there is a process in place for escalating the issue for resolution, if still not resolved, they have a call escalation facility taking the caller through to a Tier 3 consultant who is highly skilled and proficient. If still not resolved, please share examples with for investigation and improvements Powers of attorney currently allows for other powers of attorney, would like to change this in future. A POA is currently accepted if it is specific (generic POAs not accepted) and covers the requirements as stipulated on the website. RCBs mentioned that a Special POA s authorise a tax practitioners to represent the tax payer on all tax related issues. branches currently seem to have different requirements for POAs. committed to investigate and to clarify. - minded RCBs that: o There are two different types of POAs. o A TPPOA is used by the registered tax practitioner coming to the branch o A ASPOA is used by tax administrators representing the registered tax practitioner o When administrators are coming to the branch, they are required to have both these POAs and a certified identity document. o The current life span of the POAs acceptable by is 2 years. This practise is however not supported by law as Special Powers of Attorney letters are normally valid until withdrawn. The policy and procedures team at to investigate and provide feedback ultiple VAT numbers - is aware of the problem. The issue is the trading name - is looking at the compliance of all underling tax numbers within the entity, irrespective of the number of branches each unit is checked for compliance. - Challenge currently is around the TCC being issued in the first trading name for income tax. - will not back down on this; however is investigating the issue of the trading name. - Branch experience on the issue o would check compliance across the group but would still issue the TCC in the name of the JV on the VAT number Status of RCB Temporary / Permanent Covered under item 2 RCB issues 5.29 SA Residents - Historically matter has not been treated correctly. - currently not aware of any changes in the official interpretation. - In 1999 SA changed from a source based system to a residence base system. - SA brought in Section 10.1.gc to accommodate situations where even when you are a resident in SA your pension should be exempt in SA if you received a Page 9

10 6 GENERAL pension from a foreign fund in respect of services rendered there. - There seems to be some confusion in so far as the wording used in Section 10.1.gc especially around the word source. Source in this context does not refer to the normal source rules; it is referring to the fund that is sourced in another country. believes this confusion led to the view that this exemption should also apply to a pension fund from South Africa. - Before 1999 Section 9.1.g2 dealt with where the source was after 1999 the section was still being referred to, to pre-empt DTA fall outs, as DTAs ordinarily would dictate where taxes are payable for SA residence. - The source rules and everything mentioned in Section 9.1.g.2 does not apply to SA residence. RCBs have been asked to share examples of the letters from the pension fund administrators issued to their clients. 6.1 Other atters IT21A- TCC for immigration - Still contains old legislation - Will be updated on roll out of new process - To be put online - Process dependent on single registration - Reminder o RCBs are reminded that the following queries could be facilitated online Tender good standing - online - Foreign investment allowance at the branch. - Foreign investment - allowance above R4m goes to an additional review process and include immigration where above R4m. - Below R4m dealt with at a local compliance area - Admin Penalties o The matter will be addressed in the gazette. o Companies must be deal with as well, same for VAT and PAYE returns and 501s. o These to be shared via normal gazette process. o Critical for is the issues around company returns. - Data Transfer Project o Question asked if efiling will provide a dash board to provide details on members that have been uploaded. o Currently 8 different options to receive certificates o committed to investigate and provide feedback to the RCBs. - Search function on efiling o to provide feedback - to stop serving tax preparers to free up capacity to service tax practitioners; stop services at branches and all contact centres; they are to be treated as normal clients - raised a concern with this approach as tax preparers currently represent a significant number of tax payers. Page 10

11 CLOSURE : 7. The chairman closed the meeting thanking everyone present for their attendance and participation. Page 11