8 October 2007
Portfolio Committee on
Finance
Dear
Sirs
2007
Revenue Laws Amendment Bill
Please find attached the comments by Deloitte on
the 2007 Revenue Laws Amendment Bill.
As
a general comment, we would like to commend Treasury on their willingness to
engage with taxpayers with regard to the drafting process. This has enabled
taxpayers with specific problems to influence the drafting of the amendments
designed to resolve those problems at a relatively early stage. Treasury has
also been accommodating in terms of engaging with taxpayers since the draft
Bill was made public, with a view to understanding problems created by the
proposed wording or proposed effective dates of the proposals.
On
a less positive note, we are very concerned by the trend evidenced in this
draft Bill to implement provisions to the detriment of the taxpayer with
retrospective effect. While the effective dates of the introduction of the
amendments are not themselves necessarily retrospective, the way in which the
amendments are worded will in several cases, fundamentally affect taxpayers’
vested rights, in a negative way, and will convert transactions entered into in
the past (in certain cases, back to 2001!) from tax neutral or tax exempt
transactions into taxable transactions. This is simply unacceptable. Taxpayers
must be able to know with a degree of certainty when they enter into transactions
what the tax consequences of those transactions are.
A
clear policy needs to be developed with regard to retrospective legislation. We
have found that SARS and Treasury are extremely uncomfortable with making
legislation retrospective if it is designed to assist the taxpayer, even in
situations which clearly merit urgent relief, but at the same time are seeking
to bring in measures to the detriment of taxpayers without concern for whether
or not existing rights are affected.
In
our view, there must be flexibility to allow for a degree of retrospectivity
where this is clearly merited to protect either taxpayers or SARS from
significant hardship. However, in no case whatsoever should the retrospectivity
affect closed years of assessment, and it should definitely be the exception
rather than the rule in other cases. If a policy can be formulated which is
clear, then Treasury need not be uncomfortable about making legislation
retrospective where it falls within the acceptable parameters defined under the
policy, but will not be able to do so in any other case.
We
thank you for your consideration of these comments.
Yours
faithfully
Anne
Director:
Deloitte
Practitioner
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