In terms of section 234 of the Tax Administration Act (2011), certain acts or omissions constitute a criminal offence which will be, upon conviction, subject to a fine or imprisonment not exceeding two years.
Where a criminal offence has been committed, who will be held responsible where the taxpayer is a company?
WHAT ACTS OR OMMISSIONS CONSTITUTE A CRIMINAL OFFENCE?
Acts or omissions that could be regarded as a criminal offence as per section 234 (as amended by the 2020 Tax Administration Laws Amendment Act), include the wilful or negligent failure to:
- Notify SARS of a change in registered particulars;
- Submit returns or documents to SARS;
- Retain documents as required under a tax Act;
- Disclose material facts which should have been disclosed under a tax Act;
- Withhold or deduct and make payment of any tax required under a tax Act.
WHO IS RESPONSIBLE FOR CORPORATE TAX COMPLIANCE
A company’s public officer is responsible for all acts, matters or other requirements imposed under any relevant tax Act. In the case of any default, the public officer is subject to any penalties imposed for the company’s defaults.
The public officer is also the representative taxpayer of the company, and is, therefore, responsible for settling the tax debts of the company as its agent. A company is not relieved from any duty, responsibility or liability imposed under a tax Act by reason of a public officer’s failure to perform his / her duties.
A public officer only becomes personally liable for the tax payable by the company where the public officer alienates, charges or disposes of amounts in respect of which the tax is owing by the company or if the public officer disposes of or parts with funds that could have been utilised to settle a company’s tax debts.
WHO IS THE PUBLIC OFFICER?
Unless an individual is specifically appointed as the public officer, the public officer will be the director, company secretary or other officer of the company that SARS designates for such purpose.
SARS may also withdraw a public officer’s appointment if SARS at any time believes that such individual is no longer suitable to act in such capacity.
WHO MAY BE A PUBLIC OFFICER?
The individual representing a company as its public officer, must reside in the Republic and be:
- A senior official of the company (or another suitable person where no senior official resides in the Republic);
- Appointed by the company or an agent / legal practitioner with the legal authority to effect such appointment on behalf of the company; and
- Approved by SARS.
Evidently, the responsibility for corporate tax compliance ultimately rests on the shoulders of the public officer of a company. Therefore, even where a public officer engages a tax practitioner, it is advisable that the public officer remains abreast of the tax compliance status of the company.