Vol­un­tary tax dis­clo­sure a chance to ‘come clean’

Weekend Argus (Saturday Edition) - - PROPERTY -

US­ING the govern­ment’s re­cently an­nounced vol­un­tary dis­clo­sure pro­gramme, tax­pay­ers will soon be given an op­por­tu­nity to put their af­fairs in or­der if they owe tax on lo­cal as­sets or in­come, and by dis­clos­ing in­come and as­sets hid­den off­shore.

Tax­pay­ers who take ad­van­tage of the pro­gramme will be able to “come clean” with­out hav­ing to pay ad­di­tional tax, penal­ties and in­ter­est on their de­faults.

Paula Ba­graim, di­rec­tor of tax con­sult­ing at Stone­hage Fi­nan­cial Ser­vices, says the in­ter­na­tional tax en­vi­ron­ment is mov­ing to­wards greater trans­parency and a more open ex­change of in­for ma­tion be­tween tax au­thor­i­ties.

“In the wake of the global fi­nan­cial cri­sis, gov­ern­ments across the world have been scram­bling to raise their tax rev­enues to help fund bud­get deficits. The re­lax­ation of bank­ing se­crecy laws, so­phis­ti­cated au­dit ini­tia­tives and im­prov­ing co-op­er­a­tion with over­seas tax ju­ris­dic­tions and banks, in­clud­ing rec­i­proc­ity in pro­vi­sion of in­for­ma­tion, will im­prove Sars’ abil­ity to trace fund flows around the world and iden­tify South African res­i­dent tax­pay­ers with in­come and as­sets hid­den off­shore,” she says.

To en­cour­age tax­pay­ers to dis­close past non-com­pli­ances to Sars and to reg­u­larise their tax af­fairs, a vol­un­tary dis­clo­sure pro­gramme will be in­sti­tuted in terms of draft leg­is­la­tion from Novem­ber 1, 2010 to Oc­to­ber 31, 2011.

“The pro­gramme is con­sis­tent with suc­cess­ful ini­tia­tives im­ple­mented in other ju­ris­dic­tions such as the UK, Aus­tralia, the US and, more re­cently, Italy and Den­mark,” says Ba­graim.

The de­tail of the pro­gramme is set out in the Tax­a­tion Laws Sec­ond Amend­ment Draft Bill of 2010. The re­quire­ments for a valid vol­un­tary dis­clo­sure are that:

There must be vol­un­tary, full and com­plete dis­clo­sure.

There must be a de­fault, in the form of in­ac­cu­rate or in­com­plete in­for ma­tion sub­mit­ted re­sult­ing in an in­cor­rect as­sess­ment or re­fund.

A penalty/ad­di­tional tax would have been im­posed had Sars dis­cov­ered the de­fault.

The dis­clo­sure must be made in re­spect of a de­fault which oc­cur red at least 12 months be­fore the start of the pro­gramme.

Tax­pay­ers may ap­ply un­less they are aware of pend­ing au­dits or in­ves­ti­ga­tions into their tax af­fairs, or au­dits or in­ves­ti­ga­tions which have com­menced.

The full amount of tax will re­main due by tax­pay­ers par­tic­i­pat­ing in the pro­gramme. Sub­ject to cer­tain ex­cep­tions, ad­di­tional tax, penal­ties and in­ter­est re­lat­ing to the de­fault will be waived.

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