Could a proposed amendment see a simple error in your taxes land you in hot water and potentially facing criminal charges? The Draft Tax Administration Laws Amendment Bill (Draft TALAB)—which if passed, will result in SA Taxpayers dealing with dire consequences for negligent behaviour.
The issue revolves around the Income Tax Act and the removal of the words ‘wilful conduct’ when referring to tax-related offences.
Currently, the tax regulations state that before a taxpayer is found guilty of an offence, the taxpayer must first commit an unlawful act ‘willfully and without just cause’ before being found guilty of the offence.
The Draft TALAB now proposes to amend the wording of these three provisions, which will have a notable impact.
This amendment will see the removal of the word ‘wilfully’ from the legislation. By doing so, it removes any obligation on SARS to prove intent; before a taxpayer can be found guilty of one of these offences.
During a presentation on the bill to parliament, professional services firm PwC highlighted the result of these proposed amendments will not only criminalise negligent conduct but genuine errors as well.
The firm explains the Memorandum of Objects to the DTALAB, stipulates negligent conduct should be criminally punishable. Furthermore, it states the requirement of intent should be removed, so taxpayers can be held to the objective standard of reasonableness contained in the test for negligence.
With this in mind, the firm stresses the amendment will see negligent conduct punished just as harshly as intentional conduct. Therefore, PwC points out the proposed amendment will extend the scale of criminal offences and see several taxpayers subject to criminal punishments.
Additionally, due to the increase in offences, there will most likely be several more investigations and prosecutions regarding tax-related crime. But PwC stresses this may not result in higher success rates when combating tax offences.
Furthermore, as concerning as the amendment is, PwC acknowledges that in certain aspects of tax law, it would be appropriate to treat negligent non-compliance as a criminal offence. This can include the negligent non-submission of a return or non-payment of tax.
However, the firm feels offences such as failure to notify SARS of a change of address or to appoint a public officer – should be deemed criminal offences purely on the basis of negligence.
In light of these proposed changes, which, if passed will see many taxpayers in hot water for silly slip-ups—what are your thoughts on the Draft Tax Administration Laws Amendment Bill (Draft TALAB)? Do you agree with the changes and feel taxpayers should be held accountable for negligence, irrespective of the nature of the error? Or do you feel there must be some form of realistic-logic applied?
Share your opinions with us in the comment section below.
Author: Quinton Boucher
Edited: Calvin Swemmer