The government is threatening to use the law against=20 tax advisers who come up with fancy avoidance schemes,=20 reports Reg Rumney
THE first Budget of the new Government of National=20 Unity studiously avoided gnashing its teeth at anyone=20 other than those who use dodgy tax avoidance schemes.
Finance Minister Chris Liebenberg took these schemes to=20 task, no doubt at the behest of Inland Revenue. He said=20 action would not only be taken against taxpayers who=20 use complex schemes that border on being fraudulent,=20 but also against their tax advisers. This would seem to=20 necessitate a change in tax law, and is an indication=20 of how seriously the government views the matter.
But he did not spell out exactly what was to be done to=20 put right the severely understaffed and underskilled=20 tax administration, other than to announce that the=20 Commissioners for Inland Revenue and for Customs and=20 Excise would prepare strategic business plans.
South African Chamber of Business economist Ben van=20 Rensburg expressed disappointment about this at a=20 Budget briefing. “It looks weak to me. Despite the fact=20 that we are not willing taxpayers, we pay tax, and we=20 would like all to abide by the tax laws,” he said.
More pointedly, some members of the accounting=20 profession have said inadequate tax administration is=20 at least partly to blame for the rise of complex=20 avoidance schemes.=20
It is the accounting industry’s standpoint that it is=20 perfectly acceptable to structure one’s affairs so as=20 to pay the least tax.
The South African Institute of Chartered Accountants=20 chief executive, Ken Mockler, says the minister is not=20 being entirely fair in that he has mixed up tax=20 avoidance and tax evasion.=20
It is the taxpayer’s duty to comply with the law, he=20 says. Where the minister is correct is that if the=20 taxpayer or his advisers make detection difficult=20 because of non-disclosure that is evasion. Tax=20 avoidance, he stresses, is perfectly legal.
“It is not up to the taxpayer to second guess the=20 legislature,” he says. “If the law is deficient and the=20 taxpayer takes advantage of that, the remedy is to get=20 the law right.” This is where staffing comes in. “He=20 must get the department properly staffed so that they=20 write effective tax laws.”
Measures to combat tax avoidance were being proposed=20 with regard to more than one company car, the accrual=20 and incurral of interest on financial instruments,=20 interest earned by emigrants, taxation of lump sum=20 payments and the writing off of the cost of ships and=20