“Few of us ever test our powers of deduction, except when filling out an income tax form.” (Laurence J. Peter)
In this article, we look at the who, how and when of this 2022 Tax Season; highlight some issues that require special attention; and suggest practical next steps to help you avoid the last-minute rush, the risk of errors and omissions, and the cost of late submissions, penalties and audits.
At a glance
Tax Season 2022 opens 1 July 2022 – here is a quick overview of who must submit, how they must do so and when by:
Who is exempt from filing?
Even if you could be exempt at first glance you might still benefit from filing a return due to your particular circumstances. If there is any doubt, professional advice is essential.
Issues requiring special attention
Last year, non-provisional taxpayers had until 23 November, extended to 2 December at the last minute. This year’s deadline is a month earlier, on 24 October 2022.
Similarly, the 23 January 2023 deadline for provisional taxpayers is a week earlier. That’s less than seven months away, including the December and January holiday periods.
In addition, failure to submit the return(s) within the prescribed period could result in a summons and/or criminal prosecution, which upon conviction is subject to a fine or to imprisonment for a period of up to two years.
Next steps
“Tax debtors are expected to take responsibility for their tax obligations and to organise their affairs in such a way as to be able to discharge those responsibilities when required. They should give at least the same priority to tax obligations as their other responsibilities.” (SARS’ Short Guide to the Tax Administration Act)
To avoid tax debt, penalties and interest, it is best to file returns and make payments timeously. However, for a range of reasons, taxpayers may not be able to meet these requirements on time, finding themselves facing a tax debt owed to SARS.
There are different ways in which tax debt can arise, and while the taxpayers’ agreement and ability to settle this debt will determine the details of each taxpayer’s response, all tax debts should be handled the same way: promptly and with professional assistance.
If you or your company have any tax debt, take action without delay! In certain circumstances and with the right professional assistance, an agreement may be reached with SARS to defer the tax debt for later payment or for payment by instalments.
How do tax debts arise?
Tax debts can arise from administrative penalties on late or non-submission of tax returns, failure to submit tax returns, the submission of returns without payment, partial payment of a tax liability or from a SARS audit assessment.
How would you know about a tax debt?
Individuals and businesses should – proactively and on a regular basis – check their compliance status with SARS or obtain a statement of account on the various taxes payable, either from their accountant or via the SARS’ Contact Centre, eFiling and the SARS MobiApp, to confirm if SARS is owed any amounts.
SARS is also required to inform taxpayers of assessments, notifications or communications issued, by also sending a message to a taxpayer’s last known number or email address. This makes it crucial to keep your contact details updated at SARS and to check your compliance status or statement of account whenever an email or SMS is received from SARS.
No dispute, but can’t pay now?
In many cases, a taxpayer may not dispute the existence or amount of a tax debt but is unable to meet the payment required by the stipulated date.
In this case, there are two options that could be considered based on the unique facts of each case.
Until recently, taxpayers could only make payment arrangements via a debt collector who had been appointed by SARS, in person at a SARS branch, utilising the debt management regional email addresses, or on the My Compliance Profile (MCP) on eFiling.
SARS recently implemented the Enhanced Debt Management process to help taxpayers with outstanding debt initiate a request for Payment Arrangement for Personal Income Tax (PIT); Corporate Income Tax (CIT); Value-Added Tax (VAT); Pay-As-You-Earn (PAYE) and administrative penalties via eFiling.
If granted, the repayments are loaded via eFiling to be released from the taxpayer’s bank account. Interest will continue to accrue on any unpaid debt, and any breach of the conditions will terminate the payment agreement and normal collection proceedings will resume.
It is important to note that a temporary write off is generally merely a suspension of the recovery of a debt, and the debt may still be recoverable during the prescription period which, under the Act, is 15 years.
In deciding to grant a compromise, a senior SARS official must have regard to several factors. However, no compromise will be granted in several instances, for example, if the taxpayer’s other tax affairs are not in order or where a taxpayer recently had a previous compromise agreement with SARS.
A compromise also cannot be considered if the taxpayer disputes the debt. If a matter is under objection or appeal, the taxpayer must withdraw the objection or appeal before a compromise can be considered.
If you are looking for a compromise with SARS, professional assistance is crucial.
Disputing a tax debt?
Often, taxpayers disagree with assessments issued by SARS. While taxpayers do have the right to dispute an assessment by lodging an objection, it is vital to note that an objection or appeal lodged with SARS does not in any way suspend or postpone the payment of the tax debt.
Aptly named the “pay-now-argue-later” principle, it applies to all tax debt.
To prevent SARS from instituting collection proceedings on a tax debt that is to be disputed, two steps are required:
The taxpayer is protected from all SARS collection procedures between the dates that SARS receives the request, to 10 business days after SARS issues its decision to grant or decline the Suspension of Payment request.
A Suspension of Payment request can only be granted by a senior SARS official, after taking into consideration several factors, including the compliance history of the taxpayer and whether the dispute is a result of fraud.
If a Suspension of Payment request is granted, SARS may not commence any collection proceedings for the tax debt in dispute pending the outcome of the objection or appeal. However, interest will accrue on the unpaid debt.
If SARS denies the Suspension of Payment request, the taxpayer also has the option to apply to SARS for a payment plan. A Suspension of Payment is also revoked if the dispute process is not followed.
On the finalisation of the objection or appeal, a revised assessment will reflect the resulting tax debt and the due date for payment. Again, if the revised tax debt is not paid on time, SARS may commence collection proceedings.
Why you must act promptly and professionally
It is a criminal offense to not submit a tax return when it is due, and it can be a criminal offense not to pay.
If you cannot pay a tax debt to SARS and do not follow the correct procedures, SARS is legally allowed to exercise its wide powers of collection. However, SARS states that when deciding the most appropriate way to deal with outstanding tax obligations, it will give considerable weight to the tax debtors’ individual circumstances and compliance history of, for example, lodging correct returns and documents and paying taxes on time.
SARS’ debt collection powers extend to issuing a judgment and having a taxpayer blacklisted; obtaining a preservation order in respect of taxpayer assets; attaching and selling taxpayer assets; and bringing sequestration or liquidation proceedings against a taxpayer, even if the debt is disputed. In fact, even the money in your savings account or your income may be in jeopardy.
This is because SARS can access data in relation to every bank account registered in your name using your ID number and can also recover tax debt through third parties who hold money on your behalf, such as a bank, an employer, an insurance company or an attorney.
Due to recent changes to the tax laws, there have been increasing reports of SARS collecting ‘outstanding tax debts’ from taxpayers’ bank accounts, without the taxpayers’ consent. While SARS can indeed do this without any judicial oversight, it is important to know that SARS is required by law to follow specific steps prescribed by the Tax Administration Act (TAA) before doing so.
These include that the taxpayer must have received an assessment from SARS detailing how much is due and by when, as well as a final demand for payment that states available debt relief mechanisms contained in the TAA; and recovery steps that SARS may take if the tax debt is not paid. Taxpayers who can prove serious financial hardship may apply to SARS for a reduction of the amount within 5 business days of receiving the final demand or extend the period over which the amount must be paid.
Only 10 business days after delivery of the final demand, if no response has been received from the taxpayer, can a senior SARS official authorise a third party to collect the tax debt. However, if SARS does not follow the steps detailed in the TAA, collection proceedings may be regarded as illegal and in contravention of the TAA, and the taxpayer will have recourse against SARS via its Complaint Management Office (CMO), the Tax Ombud or legal action. Again, in these instances, professional assistance is strongly recommended.
“Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple. But it’s worth it in the end because once you get there, you can move mountains.” (Steve Jobs, co-founder of Apple)
It is easy in business culture to start believing that more is more. Entrepreneurs often fall into the trap that more meetings, more employees, more products and more leads is equal to more success. Many large companies have failed because they branched out too much, lost focus and, as a result, lost their market.
Quite often the idea that bigger is better and more is more can lead to poor decision making that guides a business away from its competitive advantages, confuses the market and leads to a lack of focus internally. The flip side of this is the ability to strip back unnecessary complexity and instead focus on simplicity.
Simplicity is defined as “the quality or condition of being easy to understand or to do” and it comes with some genuine advantages.
The advantages of simplicity
Removing jargon and chaff from company communications, and simplifying product offerings, your vision, team structures and communication will ensure that not only do your team know what they are doing day-to-day to achieve success, but also that they know how to do it.
Once your whole company is singing from the same hymn book it’s far easier to get the world at large to understand what you are doing too, which makes defining your brand and selling your products a simpler proposition at the same time.
|On the other side, if you have one supplier of a common product that can be sourced somewhere else, it’s much easier to keep a handle on your production line and ensure that you always have the products you need. (Of course, you do not want to be reliant on a sole supplier without the option of other sources for your essential resources). Obviously, this is an extreme example, but it will never hurt to go through your supplier lists, staffing or any other factor of your business and look at where the number of cogs can be reduced.
Also, with a select group of suppliers, it will be easier to keep informed of their health and sustainability and ability to continue supplying your business regularly and on time.
If, however, your operation has grown into a business with a number of divisions, apply these tips for simplification to each division to encourage their efficient and effective performance.
Tips for simplifying your business
Ironically, making a company easy to understand and operate is not necessarily an easy thing to do. Getting to grips with where changes need to be made will take some time and will require bold decision making. Here are our tips for keeping things simple in your business.
Having simple, clearly defined objectives and goals, that the whole team understand and commit to, gives the business the best possibility of success.
The easiest way to do this is simply to ask. Ask customers, ask friends, ask people at business meetings, or, if you are a larger company, hire a company to do a survey or bring in a consultant. Getting other people’s opinions will quickly show you if you have lost track of your core business. If there is confusion about what you do, or what your primary services are, then it’s a sure sign you may need to go back to basics or change the messaging around your company.
At the same time, ask your customers what they really want. The answers may surprise you and reveal areas where you have been putting in a lot of effort that doesn’t necessarily give the customers what they actually need. This is an essential exercise to determine the continuing relevance of and need for your service offering or product. Change is an ever-increasing factor and new products and services are coming to market. Keeping your business focussed and simple can enable recognition of the emerging threats and need to change, adapt or even develop new offerings.
Additionally, not all rules and regulations will assist your company and these need to be looked at carefully if you want to streamline workflows and increase employee job satisfaction and retention. Look, for example, at how many people need to review and sign off on expense reports or small purchases; or how many times slide decks need to be reviewed before they are presented.
Reducing menial tasks and making things easier to do gives employees more time to actually do their real jobs properly. The answer to all of this is to focus on outcomes and avoid micromanaging your team. Be sure to maintain an open line of communication with the understanding that the more you listen to your team, the simpler things will be and the better the entire group will work. In addition, being accessible and listening to your people will alert you earlier to emerging risks and potential opportunities in time to take action.
This is going to extend to your ability to hear bad news or have employees tell you when they think your decisions may be wrong. You are only going to find out about bad practices and unclear instructions if you are genuinely interested in fixing problems rather than protecting egos.
The first step is identifying your pain points. Start with the areas of the business where you are actively getting complaints. Break down what processes are leading to these complaints and fix them. The time you spend developing good practices will be more than paid back in the decreased amount of time you spend putting out fires and dealing with unhappy customers. Ultimately, you will want to look at all your processes to make sure they are running optimally, and that time isn’t being wasted unnecessarily dealing on a daily basis with inconvenient problems that could be solved outright.
At the end of the day, simplifying a company is about getting to the core of what it is you need to do, supplying customers with exactly what they need and no more, making sure your staff are well informed and working together and not overburdened with work that isn’t their place to do.
“The really expert riders of horses let the horse know immediately who is in control, but then guide the horse with loose reins and seldom use the spurs.” (Sandra Day O’Connor, former Supreme Court Justice)
For years you have been working in the industry of your choice and now you have decided to start your own business. At this point it’s hard to see just what you are going to need to do to transition the business to a thriving enterprise. One of the major skills you’ll need is the ability to let go of doing everything yourself and rather get others to actually do the heavy-lifting and carrying.
As a new manager it can be tempting, and even inspiring, to be seen “rolling up your sleeves” to execute tactical assignments. But as your responsibilities become more complex, the difference between an effective leader and someone who is battling to do everything themselves will become clear. While it may seem difficult, elevating your impact requires you to embrace an unavoidable leadership paradox: You need to be more essential and less involved. The trick is learning to delegate effectively – a skill you may not have expected to need to know.
To know if you are delegating well or need to still learn a few tricks, you just need to ask yourself this one simple question, “If you had to take an unexpected week off work, would your initiatives and priorities advance in your absence?” If the answer is no, or only maybe, then you need these tips for learning to delegate.
Work out what can be delegated
Step one is knowing exactly what can, and should, be delegated. It’s important you take time to analyse the work you are doing to assess which things aren’t maximizing your efforts and time to the fullest and then work out which tasks would help your teammates develop into the kinds of people the company will need in the future. For your team members to grow, you will need to offer them opportunities to prove themselves and learn new skills. The perfect tasks to delegate are those that are within an individual’s capabilities, but which push them outside of their comfort zone and force them to develop new skills or ways of thinking.
Take time to teach them how to do it
When you first delegate a task you will need to take the time you would have used actually doing that task to teach the new person just how to get it right. This period of training will achieve a few things. Firstly it will make the person who is tasked with the new responsibility capable of actually getting it right first time, but secondly it will give you the confidence to hand the task off effectively as well as develop your new and valuable skill of mentoring and training.
During this period of training you need to stress the reasons for the task. When people lack understanding about the value of a task or why they have been chosen to do it they also lack the motivation to do it well. Giving them the context about what’s at stake, and the benefits of the opportunity, increases personal relevance and the odds of accurate follow-through. As well as reasons, you also need to clearly provide your expectations. Your employee cannot read your mind, so the need for quality and meeting the delivery date must be equally clear-cut when you pass the job over. Once clarity is established, confirm their understanding preferably face-to-face to avoid any later confusion. Often, mistakes by trusted employees can come down to poor communication on the brief.
Let them do it themselves
For people used to doing everything themselves, this may be the hardest aspect of the entire process. While monitoring them doing the job from afar will allow you to pick up any mistakes as they happen, micromanaging them will only put unnecessary pressure on them and can force mistakes. You need to get out of their way. If your hiring process has been good, you have chosen the right person to delegate to, have clearly defined the task, taken time to teach it to them and then explained your expectations, micromanaging them doing it will not be necessary. Demonstrating that you trust them to do the work will likely yield rewards. Part of delegating is learning to respect the varied and creative ways your teammates get the jobs done instead of requiring that they do it exactly the same way you would have.
Being able to do this successfully builds confidence in the employee tasked with the job and also gives them greater job satisfaction at the end of the day when they achieve it. This in turn will make them more willing to take on other tasks and keep them happier in their workplace, meaning you are less likely to lose a now skilled employee.
Prepare accurate feedback
Once the task is complete for the first time, it’s important to have a follow-up session at which you analyse their performance with the task and offer both positive and negative feedback. This is an important step in reinforcing the lessons, building confidence and correcting any errors in technique or process before they become locked in habits. It’s as important here to recognize the things the employee did well as it is to recognize the things they did badly. Likewise, if the work differs too much from what you were looking for, take immediate and decisive corrective action. Mutually agree on a plan to return to the targeted goals and take a more active role in monitoring of the task. If the situation doesn’t improve, end the assignment and move on.
Once you are confident the job can be done well, feedback sessions remain important, but can be conducted less often. It’s vital to ensure you continue to recognise the input of your employees and reward those who are doing well. Exceptional performance is more likely to continue if it’s noticed and rewarded. Do follow through when someone performs exceptionally and be generous with promotions, salary increases, bonuses, and a sincere and heartfelt thank-you.
