This is article 3 in a series of articles discussing the updated Tax Exemption Guide for Recreational Clubs published by SARS.
Administrative provisions – Tax Administration Act
The TA Act deals with tax administration and seeks, among other things, to simplify administrative provisions by incorporating them into one piece of legislation, including administrative provisions that are generic to all tax Acts. It also aims to remove duplicated or redundant administrative provisions in the different tax Acts and, as far as possible, harmonise administrative provisions.
Some administrative provisions that apply only to, and are unique to, the administration of a specific tax type remain in the Act imposing that tax. If the TA Act is silent on the administration of a tax Act and it is specifically provided for in any other tax Act, the provisions of that Act apply. If there is any inconsistency between the TA Act and any other tax Act, the other Act prevails.
General administrative provisions contained in the TA Act relating to, for example, record-keeping, returns, assessments, dispute resolution, interest, refunds, and anti-avoidance will therefore apply to recreational clubs.
SARS is responsible for the administration of the TA Act under the control and direction of the Commissioner. The Commissioner may, to administer a tax Act, obtain full information relating to anything that may affect the tax liability of a person for any tax period, taxable event, or the obligation of a person, whether personally or on behalf of another person, to comply with a tax Act. The Commissioner may also perform any other administrative function necessary to carry out the provisions of the tax Act.
Furnishing of information
SARS may, for purposes of the administration of a tax Act, request a taxpayer to submit relevant material (whether orally or in writing) that SARS requires. A request for relevant material from a person other than the taxpayer is limited to material maintained or kept that should reasonably be maintained or kept by the person relating to the taxpayer.
Relevant material is defined as any information, document or thing that in the opinion of SARS, is foreseeably relevant to the administration of a tax Act.
The Commissioner may, under the Act, request any person whom the Commissioner may deem able to furnish information about any recreational club and may require that person to:
• Answer any questions relating to the recreational club;
• Make books of account, records or other documents relating to the recreational club available for inspection; or
• Meet with the Commissioner’s representative and produce for examination any documents relating to the recreational club.
A person who wilfully and without just cause refuses or neglects to furnish, produce or make available any document or thing, or reply to or answer truly and fully any questions posed by SARS is guilty of an offence and on conviction is subject to a fine or imprisonment for a period not exceeding two years.
Changes in registered particulars
A recreational club must inform SARS of changes in its registered particulars to ensure that SARS has the most accurate and current information. A recreational club must communicate to SARS any change of postal, physical, or electronic addresses, representative taxpayer and banking particulars.
Representative taxpayer
Persons other than natural persons, such as an NPC, a society, or an association, act through their representatives. The representatives, amongst other things, are responsible for the tax compliance and liabilities of a recreational club. The Act defines a representative taxpayer. For purposes of a recreational club, the representative taxpayer is a natural person residing in South Africa and includes the:
• Person in a fiduciary capacity of the income of a society or an association under his or her management, disposition, or control;
• Public officer of the income of an NPC; and
• Business rescue practitioner of an NPC under business rescue under the Companies Act.
A representative taxpayer under the TA Act is a person who is responsible for paying the tax liability of another person as an agent, and, amongst other things, includes a person who is a representative taxpayer under the Act. Every person who becomes or ceases to be a representative taxpayer under the Act, except a public officer of a company, must notify SARS within 21 business days, as the case may be, in such form as the Commissioner may prescribe.
Any person who wilfully and without proper cause refuses or neglects to appoint a representative taxpayer, notify SARS of the appointment, or change of a representative taxpayer is guilty of an offence and on conviction is subject to a fine or imprisonment for a period not exceeding two years.
A representative taxpayer is personally liable for tax payable in that capacity if the tax could have been paid to SARS but was not, or the amount in respect of which the tax was chargeable was disposed of. An assessment on a representative taxpayer for any tax is regarded as made on the representative taxpayer only in that capacity.
A taxpayer is not relieved from any liability, responsibility or duty imposed under a tax Act because the taxpayer’s representative failed to perform those responsibilities or duties, or the representative taxpayer is liable for the tax payable by the taxpayer.
The representative taxpayer for any society or association may generally be the treasurer, or other person appointed to administer or manage the financial assets and liabilities of the society or association.
Every company carrying on business or having an office in South Africa at all times must be represented by an individual residing in South Africa, who must be:
• A person who is a senior official of the company or, if no senior official resides in South Africa, another suitable person approved by SARS;
• Appointed by the company or by an agent or legal practitioner who has authority to appoint such a representative for a tax Act; and
• Called the public officer of the company responsible for all acts, matters, or things that the public officer’s company must do under a tax Act, and in the case of default, the public officer is subject to penalties for the company’s defaults.
A person may NOT be appointed as a public officer if that person is disqualified from being:
• Authorised as a trustee under section 6 of the Trust Property Control Act;
• An officer bearer of a registered NPO under section 6 of the NPO Act;
• A director of an NPC under section 69 of the Companies Act.
A company will be regarded as not having appointed a public officer if the public officer is not eligible to be appointed because the above requirements are not met, or notified by SARS that such a person is not considered suitable to represent the company as a public officer. In such circumstances, the company has 21 business days to notify SARS in writing of the newly appointed public officer.
If a public officer is not appointed as required, the public officer is regarded as:
• The first person who is eligible to represent the company as a public officer, in order of priority, namely, the:
Managing Director or equivalent;
Financial Director or equivalent;
Company Secretary;
Director or Prescribed Officer who has the largest shareholding in the company;
Director or prescribed officer who has held office for the longest period; and
Senior employee of the company, according to the company’s reporting hierarchy; or• Any suitable person that SARS designates for that purpose.
The business rescue practitioner is the representative taxpayer of such a company if placed under business rescue under the Companies Act. In the event of a company being placed in voluntary or compulsory liquidation, the liquidator or the liquidators appointed are to exercise all the functions and assume all responsibilities of a public officer during the continuance of the liquidation.
A company must keep the office of a public officer constantly filled and must at all times maintain a place for the service or delivery of notices. A company must notify SARS of every change of a public officer or the place of the service or delivery of notices within 21 business days of the change taking effect.
A future article will discuss the record-keeping and Income Tax Returns provisions of the Tax Administration Act.