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More power to the taxpayer

| Economic factors

In January, amendments to the Tax Administration Act gave the ombudsman more powers when addressing taxpayers’ complaints and strengthened its independence from Sars.

Previously, the ombudsman could not employ his own staff directly - he had to do so in consultation with Sars commissioner, and staff were paid by the service. The ombudsan, Judge Bernard Ngoepe, has admitted this is not an ideal situation because his office had to investigate complaints against Sars itself. That’s a bit like biting the hand that feeds you.

Now, the ombudsman’s term has been extended from three years to five. And in cases where recommendations have been made, but Sars or the taxpayer don’t accept them, reasons must be provided to the ombudsman within 30 days.

 Advocate Eric Mkhawane, the office’s chief executive, viewed the amendments as encouraging and a step in the right direction in ensuring that the ombudsman can fulfil his mandate without a perception that his office is an extension of Sars.

 In a statement, the office said it was now mandated to review “any systemic and emerging issues related to a service matter or the application of the provisions of the Act or procedural or administrative provisions of the Tax Act, bringing the OTO in line with similar entities in other jurisdictions such as Australia, the US and Canada”.

The investigation, announced by the Finance Ministry, is great news for taxpayers who have complained bitterly in recent months about the torpid refund process.

Marjorie  Low wrote to me last week: “I am an 89-year-old widow who has been a faithful taxpayer for more than 60 years. In February 2015, I was advised by an assistant at Sars that I was due a substantial refund which would be paid out on receipt of certain documentation. This has been duly presented and I was told to expect a response within 21 days.

“As nothing happened, and phone calls were unsatisfactory, I made a second visit and was asked to re-submit the documents. This was done and I was advised that I had done everything required of me and the matter would be settled in 21 days.

“After 22 days, on March 14, 2017, I phoned again and was told that my file had not yet been sent to the department which handled account refunds.

“It is totally unacceptable that Sars does not hesitate to penalise taxpayers with penalties and interest on late payments, while they take more than a year to pay a refund. 

“I was interested to hear on radio today that there had been so many complaints about late re-payments that the Minister of Finance was investigating the matter.  I look forward to a satisfactory result.”

Nicky White had a similar complaint. She has waited for months for her refund because Sars declined her claim for home office expenses - this despite the fact she had moved her financial consultancy practice into her former home. Her tax consultant repeatedly raised the issue with Sars.

Finance Minister Pravin Gordhan said last week that Sars had admitted that by the end of last month, outstanding VAT refunds amounted to R19.6 billion of the R129.3 billion claimed during the 2016-17 tax year.

Gordhan said 58 percent (or 25484) and 80 percent (R15.6 billion in terms of value) were outstanding for up to one month. Three percent (or 1487) and 1 percent (R148.3 million) had been outstanding for 10 to 12 months.

Sars was quick to issue a statement, saying it “welcomed” the investigation. The office told me: “Sars has noted the complaints and frustration of taxpayers about outstanding refunds, particularly pertaining to Value Added Tax (VAT).  We also noted that taxpayers may perceive this as a lack of concern, care and efficiency by Sars.  But this cannot be further from the truth.” 

They denied withholding funds too, saying: “It is not in the interest of Sars to withhold refunds. There are delays in some refunds, particularly where our systems have detected risk

“By January 31, 2017, Sars paid refunds totalling R155.4 billion versus the same period last year of R142.8 billion. This is R12.6 billion (9 percent) more than the previous year. 

“To date, Sars has prevented R23.8 billion in fraudulent refunds from being paid and hence the additional scrutiny being applied to high-risk cases.” 

The investigation will no doubt be of interest to the tens of thousands of taxpayers who are waiting for their refunds. If you’d like to contact the tax ombudsman, visitThis email address is being protected from spambots. You need JavaScript enabled to view it.; or call 0800662837.


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