Dear Subscriber,

The Amnesty application window is closed, and no one really knows how long it will be till they get a response on their application.

I chatted to some tax consultants and tax attorneys who were involved in the whole process and asked them what the general attitude was towards the amnesty process and how businesses are feeling now that they have made their submissions and can't turn back.

It became clear that there is still an air of nervousness with businesses who have applied for the amnesty. Majority of the applicants' are suspicious and still question SARS motives behind the process. Despite the fact that they have taken up the amnesty, businesses are waiting with baited breath for SARS to pursue them aggressively and use this process as a tool to nail them, this is the tax collection reputation that precedes SARS.

Some of the applicants, however, understood the process and used it to their benefit. The perception is that they had tax problems and they came forward to clean their slates. If they comply with the amnesty requirements, SARS is obliged to grant them amnesty since the whole purpose of this exercise is to broaden the future tax base and join all other compliant businesses out there. Fact of the matter is, some businesses were too scared to come forward initially because they knew they had problems, they were advised to disclose. They have

used this avenue to come clean without the expectations of harsh penalties.

Fairness and justice for all, broadening the tax base, starting with a clean slate going forward, creating future tax compliant businesses; this is the expectation from this amnesty. But, the questions still remain, what happens now that SARS now has all their information at their disposal? Are there any guarantees on the outcome of the amnesty? Are those businesses now the lamb to the slaughter? And most of all will SARS abuse their power?

Some interesting information stated on the SARS website, is that the South African Institute of Professional Accountants (SAIPA), South African Institute of Chartered Accountants (SAICA), South African Chamber of Business (SACOB), National Professional Teachers' Organisation of South Africa (NAPTOSA) and South African National Taxi Council ( SANTACO) have written letters requesting an extension to the small business tax amnesty deadline. The Minister of Finance, Trevor Manuel and the Commissioner of the South African Revenue Service, Pravin Gordhan met with the leaders of the five organisations so that they may present their case for the extension.

The SARS website states that the meeting was told that many potential applicants were unable to apply for the amnesty because more time was required to prepare financial statements and supporting documents. The organisations have made commitments that include utilising their own internal structures and channels to increase amnesty advocacy and education should the deadline be extended. The Minister indicated that he would recommend a short extension and make an announcement in parliament on 7 June 2007 when he introduces the Taxation Laws Amendment Bill in the National Assembly.


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Till next week.
Janine Connor
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Peter O´Halloran

Case Scenario: Client is a beneficiary in a discretionary trust. His siblings are involved in the day to day business of the trust. The trust conducts farming operations. In a planning exercise, the founder decides that client should no longer be a beneficiary because he wishes the benefits of the trust or capital on dissolution to devolve upon the beneficiaries that actually work on the farm.

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Available tax jobs for this week are:

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The joy of selling or buying a property may be short-lived should your tax affairs not be in order. To ensure tax compliance, SARS has embarked on a practice of looking into the affairs of sellers and buyers when application is made for a Transfer Duty receipt or exemption. This receipt or exemption is filed at the Deeds Office for purposes of registration of a transfer.

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