SARS-RCBs National Ops Meeting Feedback Q4 2024
The last SARS RCB National Operations Meeting for 2024 was held virtually on 28 November, covering several crucial agenda items affecting tax practitioners and taxpayers. Read below for a summary of the issues raised, SARS' responses, resolutions and actions to be taken, ensuring you stay informed and equipped.
Inconsistency in the Treatment of PBOs
There are differences in reporting requirements for public benefit organisations (PBOs) based on their legal form (trusts vs. non-profit companies). For example, beneficial ownership reporting is required for trusts but applied differently for NPCs.
SARS Response
SARS explained that differences stem from the legal structure chosen by the PBO (e.g., NPC, trust, or association). Trusts must comply with trust-specific obligations, including certain disclosures under IT3T. They emphasised the importance of aligning reporting with the legal entity's requirements. SARS upheld current practices, with plans for detailed discussions in trust-specific sessions. SARS reiterated the importance of aligning with legislative requirements and offered to conduct clarity sessions with practitioners on this topic. FAQs and trust-specific webinars are available on the SARS website to address common concerns. Proper financial reporting assessment (e.g., categorising expenditures as distributions vs. operational costs) can reduce unnecessary reporting burdens for PBO trusts.
Beneficial Ownership Disclosure in ITR14
Practitioners reported challenges to RCBs complying with beneficial ownership disclosure requirements in the ITR14, specifically regarding the following:
Disclosures of beneficial owners are limited to 9 individuals per submission, even when companies have more shareholders exceeding 5% ownership.
Identifying ultimate ownership or effective control in companies with numerous shareholders or layered ownership structures remains challenging.
There is uncertainty about whether public officers should be disclosed as beneficial owners due to their influence over company decisions.
SARS Response
SARS updates its guidance, emphasising ultimate ownership or effective control as the reporting criteria. The rule restricting reporting to nine beneficial owners will remain, as SARS believes ultimate control is unlikely to extend beyond this threshold. The threshold for shareholder disclosures has been updated from 5% to the top 20 shareholders, irrespective of percentage holdings. When including beneficial owners in the return, list the top 9 beneficial owners.
Practitioners will receive interim guidance, and SARS and the Companies and Intellectual Property Commission (CIPC) will continuously collaborate on the disclosure requirements. Practitioners are encouraged to escalate complex cases directly to SARS for guidance. SARS reiterated its openness to resolving issues before they escalate into broader challenges.
Cessation of Residency
SARS requires a passport stamp as evidence of dates for cessation of tax residency, when this is often not the correct date.
SARS Response
SARS acknowledged the need for case-by-case assessments and reviewing the document requirements, as there is no one-size-fits-all solution. It is recommended that practitioners should escalate complex cases directly to SARS for resolution.
Challenges with Trust Registrations
There is often no communication from SARS regarding trust registrations, including when the trust is registered and when reference numbers are shared. Tax practitioners appointed by taxpayers to register trusts must have the information to register tax types, etc. The problem is prominent in certain regions.
SARS Response
SARS is refining the process and implementing measures for better regional consistency and feedback. Expect streamlined processes soon, including consistent communication mechanisms.
Verification vs. Audit on eFiling
Concern was raised to SARS regarding the use of terminology on efiling, where cases are labelled as "audits" when they are, in fact, "verifications." This creates confusion as the processes, timelines, and obligations for verification and audit differ significantly.
SARS' Response
SARS admitted to the incorrect labelling on eFiling and confirmed that steps are being taken to fix this issue. To reduce confusion, the correct term, "subject to verification," will replace "audit" where appropriate. A clear distinction must be made between a verification and an audit:
A verification is focused on validating declarations and assessing supporting documentation, typically with shorter processing times.
An audit is a more complex and detailed investigation with extended timelines, often involving specialised SARS teams.
Guidance to tax practitioners:
Until the eFiling error is corrected, assume cases labelled as "audit" are verifications unless formal audit communication is received. If in doubt, escalate queries to SARS.
SARS will fix the eFiling labelling error and communicate the correction to practitioners. It will also continue engaging stakeholders to refine and standardise verification and audit processes.
Contact Us Mailboxes and Contact Centre Challenges
Contact Us Mailboxes
Case numbers generated via the Contact Us mailboxes are sometimes not linked to taxpayer records. As a result, it is impossible to upload supporting documents and is difficult to follow up on cases due to unrecognised case numbers.
Mailboxes occasionally appear full, and there is a lack of automatic responses acknowledging emails.
The recent discontinuation of debt management mailboxes has increased reliance on the PCC and Contact Us mailboxes, exacerbating existing issues.
Contact Centre Appointment system issues
The “Next” button in the booking system is often greyed out, preventing practitioners from proceeding with bookings.
Appointment slots are frequently unavailable despite the urgency of matters.
Practitioners registered with passport numbers cannot use the tax practitioner queue and are forced into general queues where calls are often dropped.
Systemic Issues - OTO
High call volumes at the contact centre, driven by unresolved email queries and limited self-service options, contribute to significant delays.
Practitioners are forced to rely on email for specific requests (e.g., manual letters of compliance) due to the lack of online alternatives.
SARS Responses
Mailbox Functionality
SARS acknowledged practitioners' frustrations and encouraged the submission of specific examples of unlinked case numbers to investigate and resolve the issue.
Plans are underway to transition from email-based queries to more structured online channels to reduce inefficiencies and address cybersecurity risks.
Contact Centre Enhancements
SARS is working to improve the appointment system by increasing the availability of slots and addressing technical glitches, such as the greyed-out “Next” button.
The issue of practitioners with passport numbers being excluded from the practitioner queue has been identified, and enhancements to address this are under review.
Planned Improvements
SARS is exploring electronic solutions for processes currently reliant on email (e.g., manual letters of compliance and year-end changes).
Long-term goals include expanding the functionality of online channels to reduce reliance on contact centres and emails.
Guide to Tax Practitioners
Submit detailed examples of unlinked case numbers or unresolved issues to SARS to assist in resolution.
For unavailable appointment slots, practitioners should prioritise urgent matters and attempt alternative channels, including escalating critical cases through SARS regional contacts.
7. eFiling system challenges and bank verifications
Practitioners reported discrepancies in the bank verification process on eFiling. Bank details are marked as valid on eFiling, but refunds are withheld. Practitioners discover that further bank verification is required only through the contact centre, causing delays and frustration.
Concerns were raised about why such verifications are triggered when details are already validated and unchanged.
SARS Responses
SARS acknowledges system challenges and the need to balance simplicity with fraud prevention measures. The issue has been identified as part of a broader review to streamline the bank verification process and ensure accurate status updates on eFiling. Enhancements will provide clear and accurate status updates to avoid unnecessary calls to the contact centre. Practitioners can expect updates as these changes are implemented.
8. IT144 Exemptions
Practitioners sought clarity on when IT144 returns must be submitted for donations exempt from donations tax, particularly:
How to handle small, casual gifts cumulatively within the R100,000 annual exemption.
Whether returns are required when no tax payment is due under these exemptions.
SARS Responses
SARS acknowledged the complexity of IT144 filing requirements for exempt donations and committed to providing detailed guidance. Practitioners should await formal clarification while ensuring compliance with existing legal provisions. According to the Income Tax Act, an IT144 return is required only if a payment of donations tax is due. No return is needed if all donations are exempt (e.g., under the R100,000 threshold). The Tax Administration Act allows SARS to require additional reporting for tax administration purposes, but this remains under consideration. Various challenges were identified, including the administrative burden of tracking numerous small donations, such as casual gifts, which may not be practical. Guidance should:
Ensure accurate reporting to prevent revenue leakage while avoiding unnecessary administrative complexity.
Clarifying when maintenance payments or asset donations (potentially subject to estate duty or capital gains tax) may trigger IT144 filing requirements.
9. Registered Details on RAV01
Practitioners highlighted concerns about managing registered details on the RAV01 form and the lack of functionality for embedding the practitioner-client relationship. Key issues include:
Practitioners have reported that SARS often bypasses them and communicates directly with taxpayers, even when practitioners are authorised representatives on eFiling. This creates delays and confusion, especially when practitioners are their clients' primary point of contact.
Taxpayers cannot specify their tax practitioner as the preferred contact on RAV01. This limitation prevents practitioners from being automatically included in communications despite their critical role in managing tax matters.
SARS Responses
SARS is developing a Relationship Management Module within the RAV01 that will enable taxpayers to designate their tax practitioner as their preferred contact. Once implemented, this functionality will ensure that practitioners consistently engage in all correspondence where the taxpayer chooses this option.
10. Lack of Taxpayer Details on SARS Correspondence
Tax practitioners still report receiving SARS-issued correspondence without taxpayer details.
SARS Responses
Enhancements to correspondence templates are being planned.
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