M.Com. (Taxation) / The purpose of this study is to determine the desirability of the implementation of a system of self-assessment in South Africa. The current system has several shortcomings and self assessment might be an improvement. Several of the developed countries have already gone onto self-assessment systems. These countries include The United States of America, Japan, Australia and the United Kingdom. A self-assessment system The Margo Commission recommended a self-assessment system in their report on the tax structure of South Africa. They motivated this recommendation as follows: "Under a system of self assessment, taxpayers would perform functions which are at present being discharged by assessors. With that responsibility shifted from assessor to taxpayer, Inland Revenue could confine it self to a selective audit of cases which would be much more productive in respect of revenue and manpower." (Margo Report, 1986:para 28.37) A self-assessment system is in short a system where the taxpayer computes his/her tax liability, completes the relevant forms and sends the payment together with the forms to the Revenue Authorities. The Revenue Authorities apply scientifically developed selection methods to select taxpayers to be audited. The Office of the Commissioner will then be able to concentrate his limited resources on revenue producing sectors and those sectors where the possibility of tax evasion are perceived to be the biggest. In this way more tax can thus be collected. The Margo Commissions' report appeared in 1986. With the obvious advantages of a self assessment system one tends to wonder why this system has not been implemented yet. Reasons why South Africa docs not have a self-assessment system The Department of Inland Revenue gives the following two reasons for the delay: The material number of discretions contained in the Income Tax Act; and The current computer system will have to be upgraded to handle a self-assessment system. A system that will be able to handle self-assessment will cost approximately R 16 million. It is true that discretions are a problem in a self-assessment environment, because of the uncertainty they create when the taxpayer do not know how the Commissioner will apply the discretion. This problem need not be overwhelming, as all the other countries under self assessment have discretions in their income tax acts. Discretions can never be removed completely. Other have to be found to create certainty, for example practice notes and binding directives. Several discretions have already been removed from the Income Tax Actwith the 1991/1992 and 1992/1993 budgets. By managing the remaining discretions effectively, self-assessment can be a very real possibility. There are several other problems in the way of implementing a self-assessment system, which might prove more difficult to overcome than discretions. Some of these are: • The high illiteracy rate; • A material percentage of the populations are living below the bread line and every available cent is spent on reconstruction and development; • It is only human to expect that there will be a resistance against change • The high cost of compliance. Research in Australia has shown that the cost of compliance for the taxpayer did not decrease and it might even have. increased (pope and Fayle,1991:44)
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:uj/uj:12166 |
| Date | 27 August 2014 |
| Creators | Malan, Cicelia |
| Source Sets | South African National ETD Portal |
| Detected Language | English |
| Type | Thesis |
| Rights | University of Johannesburg |
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