Even though there are a good couple of speed bumps in the road, the current fact is that law firms need to submit the IT3b - client interest data to SARS as laid out in the Government Gazette 35090 and 36346.
Tech4Law spoke to Mark Kingon, the operational service escalation and support group executive for SARS, to get more clarity on what SARS is expecting from law firms.
I must say it was a refreshing interview with Mr Kingon, not only did I get a meeting request very promptly from his personal assistant but he called me on the dot of the appointment time. Also the biggest takeaway from our discussion was the positive attitude from SARS to help the law firms comply, and with the least amount of disruption to the law firm business.
Although the reason to those handling investments on behalf of the law firm, seems quite logical, to people like myself the explanation of why this step by SARS is important was very interesting. When the investment is made by the law firm with a financial institution, most often the end client of the law firm is not known to the financial situation and therefore the interest declaration by the financial institution is reflected as the law firm. So for SARS to identify the income derived by the individual it needs the IT3b data from a responsible financial party - and this responsibility falls on the shoulders of the law firm.
Before I thought SARS was receiving the information from three sources however it turns out that unless the individual discloses his interest income, SARS is left with a black hole on the amount of tax that is due.
This issue is nothing new, as it was outlined in Section 69 of the Income Tax Act that responsible financial parties need to disclose information for those who receive income from interest-bearing accounts.
For low-volume client investments the law firm can submit this information via e-filing and larger volume firms will need to submit the data via a bulk data file upload.
The next biannual cut off for the submission was 31st August 2013 and submissions need to be submitted by 31st October 2013. The previous deadline at the end of May 2013 was a mad rush trying to get the information from the banks to submit, however Mr Kingon mentioned that the attorney firm already has the data from the records on the investments and that they should be compiling the IT3b data on an on-going basis and should be ready to submit this to SARS without relying on the banks.
To submit the IT3b:
If a third party return comprises of 20 or fewer detailed records, the declaration portion of the return and the detailed portion of the return must be submitted:
- Electronically using the SARS e-filing platform, or
- Manually to the SARS office closest to place of business.
If a third party return comprises of 21 to 50 000 detailed records, the declaration portion of the return must be submitted electronically using the SARS e-filing platform and the detailed portion of the return must be submitted electronically using the SARS hypertext transfer protocol secure (https) bulk data file platform. (Details of this process are available on the SARS website)
There are still negotiations happening between SARS, LSSA and the banking sector, so things may change in the future, but for now submissions need to continue.
Deadline: 31st October 2013