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In 2013, the office of the tax ombud was created to strengthen taxpayers’ rights and provide taxpayers with recourse if they were unhappy with complaints relating to service, as well as procedural and administrative issues, from the SA Revenue Service (Sars).
Although this was, in itself, an important move to improve the accountability of Sars, the role of the tax ombud was still limited, especially when compared with the roles and powers of tax ombuds in other countries.
Many of the requirements undermined the independence of the tax ombud, including the fact that the Sars commissioner had to approve the appointment of all tax ombud staff, had full discretion over the budget allocated to the tax ombud and that the recommendations made by the tax ombud were not binding on Sars and taxpayers.
Proposed amendments to the Tax Administration Laws Amendment Bill will allow the office of the tax ombud to appoint its own staff in terms of the SA Revenue Service Act, and the finance minister will determine the budget for the tax ombud.
“This means that the funds allocated to the tax ombud will be ring-fenced within the Sars budget,” says tax ombudsman Judge Bernard Ngoepe.
The amendments include a proposal to extend the term of office of the tax ombud from three to five years. According to Ngoepe, this is in line with other tax ombud organisations internationally, and also provides the incumbent time to implement their objectives.
“It is also challenging to recruit highly skilled individuals on a short-term contract. To attract these skills, one needs to offer at least a five-year contract,” says Ngoepe.
Although the draft amendments do not go as far as making the tax ombud recommendations binding on Sars, it will require Sars to provide a reason for not implementing the recommendations, and these reasons will be included by the tax ombud in a report to the minister or the commissioner.
Although, ideally, the tax ombud’s determinations should be binding on Sars, at least by insisting on a reason and including a report, Sars is required to apply its mind to each matter brought by the office.
“This is simply good governance. People have a right to receive a reason as to why a recommendation is turned down. This should not be a debate in this country,” says Ngoepe.
There is, however, one amendment that does not go far enough – and where taxpayers need to become more vocal – and that is the fact that the office cannot initiate an investigation into any “systematic or emerging issues”.
The amendment still requires the finance minister to request an investigation.
This means that the tax ombud can only investigate issues relating specifically to formal complaints received, and is not able to investigate any other problem he may identify that may negatively affect taxpayers if that problem does not relate directly to that complaint.
Also, on many occasions, issues are communicated to the tax ombud by different industry bodies and tax practitioners, but no formal complaints are lodged for a variety of reasons.
Due to the limitation in place on the tax ombud’s mandate, it is impossible for him to make recommendations regarding these issues to Sars.
With the proposed amendments, the tax ombud may investigate issues not specifically related to complaints, which increase its mandate, but this may only be done after an express request from the minister.
This undermines the taxpayer’s rights and public interest as precedence already exists – the National Consumer Commission is allowed to institute its own investigations, as is the Competition Commission.
A systemic issue that has already been raised with Sars relates to the invalidation of tax objections.
As a taxpayer, you may object to an assessment if you are aggrieved with the assessment outcome. Sars can allow, disallow or partially allow the objection. If Sars disallows or partially allows the dispute objection, the taxpayer can still appeal the decision.
Sars may invalidate objections and appeals if submitted outside the timeframes, and also if not submitted in the prescribed format. If, however, Sars invalidates the objection, taxpayers could submit an amended objection wherein the defect has been remedied.
The ombud’s office has received a high number of complaints in which it has found that Sars has invalidated an objection incorrectly.
“We are still engaging with the ministry and hope that a solution will be found,” says Ngoepe, who adds that any concern about the possible abuse of the system by the tax ombud’s office can be handled through various mechanisms while still providing this wider investigative power.
If you would like to assert your rights and comment on the draft legislation, you can view the Tax Administration Laws Amendment Bill on the National Treasury’s website, treasury.gov.za, and submit your comments to Adele Collins at acollins@sars.gov.za no later than August 8.
