THE introduction of the Tax Administration Act will bring major changes to taxpayers in the year ahead, says Johan van der Walt, tax director at law firm Cliffe Dekker Hofmeyr.

The act has given the South African Revenue Service (SARS) tremendous powers enabling it to "strategically pursue intentional non-compliance". It also provides for the appointment of a tax ombud who is meant to ensure that SARS does not "over-exploit" its new or existing powers.

Mr van der Walt was concerned over the independence of the ombudsman since that office will be financed by SARS, with personnel being seconded from the agency, even if the ombud is appointed by the finance minister and not the SARS commissioner.

Mr van der Walt also said there was great uncertainty over the implementation of the act as well as over the extent to which taxpayers will be able to test powers given to SARS.

Beric Croome, a tax executive at Edward Nathan Sonnenbergs, writing in an article earlier this year, said the act has created clarity on SARS’s powers of gathering information.

"On the one hand, SARS must administer the tax laws of SA and is entitled to obtain the information to meet its mandate. On the other hand, taxpayers are entitled to a right to privacy, as enshrined in the constitution."

He also said: "There is, therefore, tension between the powers of SARS and the right of taxpayers to privacy. The power to conduct search and seizure operations without a warrant is controversial, and it is hoped that this power will only be used in those instances where it is warranted, and that it is not abused."

The power to issue a jeopardy assessment when the commissioner of SARS is of the opinion that tax collection could be compromised has also raised eyebrows. Thus the commissioner can issue an assessment even before the taxpayer was supposed to file a tax return.

Finance Minister Pravin Gordhan has to appoint a tax ombud before the third quarter of next year. He indicated in his budget speech in February that he wanted to fill the position this year.

Adrian Lackay, SARS spokesman, said taxpayers have the right to question SARS’s conduct.

However, SARS recognised that it was not easy for individuals to question the authority and procedures of such an influential organisation.

"It’s a bit like David and Goliath. The tax ombud will be the power base from which individual taxpayers can challenge SARS’s administrative action, procedures and service," he aid.

The tax ombud will be able to recommend corrective action for SARS to take. The ombud would also be able to initiate his or her own reviews of SARS’s service.