General
1740. Public officer awareness
June 2009 – Issue 118

 

 

A public officer is the representative taxpayer for a company, and therefore that person will serve as the face of the company for tax purposes. All actions carried out in his capacity as a public officer are deemed to have been done by the company. A company is required to appoint a public officer within one month after the company begins to carry on a business or acquires an office in South Africa. Failure to do so will result in the Commissioner designating a director, member (in respect of a close corporation) or the company secretary as public officer. To qualify as a public officer a person has to be a natural person who is resident in South Africa.

 

Companies should be cognisant of the duties imposed upon the public officer and should empower that individual accordingly to enable that person to properly fulfill those duties. The public officer is responsible for attending to the tax affairs of a company, and is deemed to be answerable for the numerous activities and duties which are required to be performed by the company, including, inter alia, the submission of annual tax returns and provisional tax returns; registration as a taxpayer and as an employer; submission of employees’ tax monthly declarations and annual returns; notification of address changes and acceptance of notices served against the company.

 

The Income Tax Act No 58 of 1962 (the Act) provides that no appointment of a public officer shall be deemed to have been made until notice thereof specifying the name of the public officer and an address for service or delivery of notices and documents has been given to the Commissioner. In the event that a public officer is not appointed, two separate penalties will be incurred.

 

Firstly, any company which defaults in appointing a public officer or any other related duties required in terms of the Act, incurs a penalty not exceeding R25 for every day during which the default continues.

 

Secondly, under the new administrative penalty provisions (which came into effect on 1 January 2009), failure to appoint a public officer would also qualify as non-compliance. SARS may impose administrative penalties on non-compliance in the following circumstances:

 

The penalty will be calculated based on a penalty table according to the assessed loss/taxable income for the year preceding imposition of the penalty. For a first offence this penalty could be between R250 (if the company has an assessed loss) and R16 000 (if the company has taxable income over R50 million).

 

Where the taxable income of a person for the preceding year is unknown, the SARS could:

 

As previously stated, a public officer of the company must be appointed within one month after the company begins to carry on business or acquires an office in the Republic.

 

A company is obliged to notify the Commissioner of the change in public officer within fourteen days of such change taking effect.

 

The information that needs to be furnished to the Commissioner in respect of the appointment and change of a public officer is as follows:

 

It is, therefore, evident that the role the public officer plays is of extreme importance. Companies have to ensure that a public officer is appointed in due time, as the consequences of not doing so and not providing the SARS with the relevant information may result in hefty penalties which could have been avoided.

 

Ernst & Young

 

IT Act:S 75B,

IT Act:S 101

Regulations promulgated under section 75B

 

Editorial comment: The R25 per day penalty that may be levied under section 101(8) will be repealed once the Minister of Finance announces a date in the Government Gazette in terms of section 13(1) of the Revenue Laws Second Amendment Act No. 61 of 2008. The effective date has not yet been Gazetted.