Sars eyes paper-free tax system in the future

A radically transformed revenue-collection system was envisaged by commissioner of the South African Revenue Service (Sars) Pravin Gordhan on Wednesday.

Explaining the changes that Sars is implementing this year, Gordhan told Parliament’s finance committee that this year employers would be able to use Sars’s own payroll software, which will involve a simplified process, and a form (EMP501) that will allow them to do their own reconciliations of deductions and IRP5 forms.

“Reconciliations will need to increase in frequency over the next few years,” he told the committee.
An annual account is all that is necessary this year, but next year the reconciliation will have to be done every six months, and from 2010 it will be every quarter.

“Eventually,” he said, “we shall move to real-time reconciliation, though I don’t think many of us will be around to see it.”

However, by 2012, he reckoned the tax filing system would have become so automated that the tax could be assessed and paid and refunds automatically transferred into taxpayers’ bank accounts without filling in a form at all.

For individual taxpayers, no tax return form will be sent in the post this year. Instead a letter will be sent asking individual taxpayer to request a tax form if they need one. “It is a bold move,” Gordhan said. “It is a culture shift, so we will be as sensitive as possible to public reaction.”

It is necessary, he said, because of the huge waste of money sending out forms to the one million tax payers who file their returns electronically, and to those employees who from now on will not need to file returns if they earn less than R120 000 a year and have not changed employer during the year.

The returns received by taxpayers, whether electronic or paper, will already have their IRP5 data filled in—“pre-populated” he called it.

This gets over two particular problems. One is that taxpayers frequently make mistakes when copying figures from their IRP5s, the other is that so do the staff at Sars.

Gordhan admitted to the committee that the challenge set his organisation by the finance minister to collect R642,2-billion-worth of tax this year is a tough one.

Because of the economic climate, with high inflation, rising interest rates—both of them working to reduce consumption—the tax take may well be down. Profitability was impacted by global and local conditions, he said.

“But we shall continue to work towards the R642-billion.”—I-Net Bridge

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