In a rapidly changing tax environment, understanding the rights and obligations of taxpayers is crucial for fostering compliance and enhancing engagement. But the question remains: Are we there yet in promoting a truly SMART taxpayer?
A SMART taxpayer is not only aware of their rights and obligations but also engages proactively with the tax system. This means being informed about tax laws, filing accurately and on time, and taking advantage of available resources and support.
Rights and obligations
On 1 February 2022, the then Tax Ombud, Judge Bernard Ngoepe, released a draft of South Africa’s first Compendium of Taxpayer Rights, Entitlements and Obligations. This essential document outlines the fundamental rights and obligations of taxpayers regarding their tax affairs and engagements with the South African Revenue Service (SARS) and the Office of the Tax Ombud (OTO).
The compendium specifies key rights, including:
- access to information about their tax affairs;
- a fair, unbiased and just tax system;
- confidentiality of personal and financial information; and.
- the right to representation in dispute assessments or decisions.
Additionally, taxpayers are entitled to:
- complain without fear of victimisation;
- make requests, proposals or applications to SARS;
- finality in tax assessments, ensuring that they are not subjected to indefinite scrutiny;
- receive quality and timely service from SARS; and
- pay no more than the correct amount of tax due.
While these rights empower taxpayers, they come with specific obligations. For instance, to dispute an assessment, a taxpayer must submit an objection within 80 business days of receiving the assessment or SARS’s decision. This highlights the necessity for taxpayers to remain vigilant in managing their tax affairs. Furthermore, it is crucial for them to keep their personal information updated with SARS, including changes in income or address, to minimise potential disputes and ensure they maximise their entitlements.
Beyond this, taxpayers also have an ethical responsibility to ensure the accuracy of their tax returns. Misrepresenting income, inflating deductions or failing to report all earnings not only undermines the integrity of the tax system but can also lead to severe consequences, including penalties, interest or even criminal charges. It is essential for taxpayers to approach their tax obligations with honesty and integrity, recognising that transparency benefits everyone in the long run. By committing to ethical practices, taxpayers contribute to a fairer tax system and help build trust between themselves, SARS and the wider community.
Embracing Technology
Since the introduction of eFiling in 2007, nearly 100% of tax returns are now submitted electronically. Innovations like SARS auto assessments and the use of third-party data have transformed the tax landscape, simplifying the process for many. These advancements enable automatic assessments based on information from banks, employers and other institutions, reducing the burden on taxpayers and enhancing compliance. However, while these developments make tax filing more straightforward, they also introduce new challenges. Many taxpayers may not fully understand how auto assessments work or what data is used to evaluate their tax obligations, leading to potential disputes with SARS.
The importance of education
In my practice, I have witnessed the critical role that educational initiatives and workshops play in bridging the knowledge gap in tax compliance. Organisations and SARS have made commendable efforts to host seminars and provide valuable resources, including the informative YouTube channel, SARS TV, and various free workshops. However, attendance often falls short, especially among small business owners and self-employed individuals who stand to benefit the most.
To truly empower these taxpayers, enhancing outreach and engagement strategies is essential.
Support systems: The role of the Tax Ombud
The position of the Tax Ombud was established to balance SARS’s powers with taxpayer obligations, remedies and rights. This role is crucial in ensuring that taxpayers are treated fairly and have a clear understanding of their rights. The Ombud’s office has published a comprehensive compilation of taxpayers’ rights, entitlements and obligations, serving as a vital guide for individuals navigating the tax system. This resource not only clarifies taxpayer rights but also provides support and recourse, reinforcing their confidence in engaging with SARS.
The importance of using registered tax practitioners
As taxpayers navigate the complexities of the tax system, many seek assistance from tax practitioners. However, it is vital for taxpayers to ensure that these practitioners are licensed and qualified to avoid costly errors and misguidance. While it is essential to trust the expertise of tax professionals, taxpayers should take the extra step to verify their credentials. SARS provides an online tool where taxpayers can confirm the status of their tax practitioners. This proactive approach not only protects taxpayers from potential pitfalls but also fosters a culture of accountability and professionalism within the tax practitioner community.
Moving forward
Looking ahead, it is clear that while we are not quite there yet in promoting the SMART taxpayer, we are moving in the right direction. Ongoing educational efforts, more accessible workshops and a continued focus on transparency can empower all taxpayers to better understand their rights and obligations.
By embracing these initiatives, we can foster a culture of proactive engagement, ensuring every taxpayer feels informed and confident in their tax affairs.