Amendments to boost ombud’s independence

Proposals aimed at enhancing the independence and effectiveness of the Tax Ombud have been included in the draft Tax Administration Laws Amendment Bill, which was published for public comment this week.

The proposed amendments to the Tax Administration Act provide for:

• The Tax Ombud to be appointed for a term of five, instead of three, years. The term may be renewed, as is currently the case. Judge Bernard Ngoepe told Personal Finance that his office’s request for the term to be extended was based on a study of similar institutions within and outside South Africa, which found that, in most cases, ombuds were appointed for five years. The longer term will make it easier to recruit people with the right qualifications to the position, he says.

• The Tax Ombud to employ staff without having to obtain the consent of the Commissioner of the South African Revenue Service (SARS), as is currently the case.

• The Tax Ombud to control its own budget, which is approved by the Minister of Finance. Currently, the expenditure connected with the running of the office is paid out of SARS’s funds.

• The mandate of the Tax Ombud be extended to include the investigation and review, at the request of the Minister of Finance, of any systemic issue related to SARS’s service, the application of the Tax Administration Act, or the procedural or administrative provisions of a tax law. Judge Ngoepe said his office had requested that it be empowered to conduct such investigations on its own initiative. But, because of fears that this could result in it abusing its powers, the proposal requires the minister to request the investigation.

• If SARS or a taxpayer does not accept a recommendation by the Tax Ombud, they must provide the Tax Ombud with reasons for rejecting the recommendation. Decisions by the Tax Ombud are not binding on either the taxpayer or SARS. Currently, either party can reject a recommendation without having to provide a reason for doing so. In its explanatory memorandum, National Treasury says the proposed amendment will enable the Tax Ombud “to review the reasonableness of the reasons, to inform future action”.

Judge Ngoepe said the proposed amendments have been requested by his office, as well as stakeholders in the taxation sector, in order to strengthen the Tax Ombud’s independence from SARS.

The draft Tax Administration Laws Amendment Bill can be downloaded from the home-page of the National Treasury website, www.treasury.gov.za. The public has until August 8 to submit comments to acollins@sars.gov.za