TAX3704_ ASSIGNMENT MCQ SEMESTER 2.

TAX3704_ ASSIGNMENT. TAX3704 - Tax Administration. SARS contacts you with a view to conduct a field audit in respect of one of your clients. Since you are well aware that SARS audits can sometimes be time consuming, there is ... (1) no reason to request written reasons from SARS until the finalisation of the audit. (2) reason to request information from SARS about the scope of the field audit (see chapter 5). (3) the possibility that if you pursue the fact that the constitutional rights of your client (the taxpayer) are adversely affected, SARS may invoke audits against all of your clients. (4) the reasonable possibility that your professional credibility as a tax practitioner may become questionable if you request a report in respect of the field audit being executed at your premises. QUESTION 4 ASSIGNMENT 01: SECOND SEMESTER Which statement is TRUE? A person submitting a document without the necessary authorisation may do so only if he or she ... (1) has gained access to efiling with a person’s consent and supplied an electronic signature to the document. (2) submits an electronic document with a person’s consent and electronic signature. (3) submits communication to SARS on behalf of another person’s electronic signature. (4) submits a return or document with the consent and authority of a person (section 237 determines that a person who submits a return or document can only do so with the consent and authority of the other person, which should preferable be in writing). QUESTION 5 Which ONE of the following statements is CORRECT? SARS must remit a penalty in exceptional circumstances such as in the case of an individual’s serious financial hardship: (1) in the case of a natural or human-made disaster (2) a lack of basic living requirements (section 218 determines that SARS must upon receipt of a “remittance request” remit the penalty that in the case of an individual will lead to a lack of basic requirements (3) an immediate danger that the continuity of an individual’s employment may be jeopardised (4) any other financial circumstance(s) of analogous seriousness QUESTION 6 Which ONE of the following statements is NOT CORRECT? The following statements relate to the first-in-first-out principle for purposes of paying outstanding tax liabilities. (1) Any payment of an amount by a taxpayer is a separate payment and may be set-off against the common taxpayer account. (2) An outstanding amount of tax liability may be set-off by allocating a receipt against a new outstanding tax liability (section 166(2) determines that the first-in-first-out principle may be applied on the oldest amount of outstanding tax, except in the case of outstanding tax that has been suspended or is payable in terms of an instalment payment agreement). (3) If an outstanding tax liability becomes due and payable, any receipt will be set-off against the oldest amount of an outstanding tax liability. ASSIGNMENT 1: SECOND SEMESTER STUDENTS (4) Any payment by a taxpayer owed in respect of an outstanding tax liability, is set-off firstly against the interest owed by the taxpayer. QUESTION 7 Which statement is NOT a CORRECT statement? SARS may issue a reduced assessment if ... (1) the taxpayer did not object to the assessment. (2) the taxpayer has reached an agreement with SARS. (3) a bona fide mistake was made by SARS or a taxpayer in respect of a return. (4) a taxpayer wishes to contest an unreasonable assessment in court (section 93(1)(c) determines that SARS may alter an assessment to give effect to a judgment pursuant to an appeal and there is no right of further appeal). QUESTION 8 A decision by SARS not to remit a penalty in whole or in part is subject to ... (1) a request for complete reasons by SARS. (2) an objection to a penalty that was raised incorrectly. (3) an appeal to the Tax Court. (4) an objection and appeal (section 220). QUESTION 9 If SARS directs a taxpayer to provide “relevant material” and certain materials were lost during a house robbery, SARS may verify such material for a specific year of assessment or for the purposes of revenue estimations by ... (1) a letter of confirmation from the taxpayer. (2) an oath or solemn declaration to a senior SARS official (section 46(7)). (3) the taxpayer requesting a third party to provide such information. (4) providing any other material to a SARS official during a reserved discussion. QUESTION 10 If SARS issues Mr B with an understatement penalty with which a taxpayer or his tax practitioner is dissatisfied, he can remedy such a penalty by ... ASSIGNMENT 01: SECOND SEMESTER (1) appealing against the penalty raised by SARS. (2) objecting to the penalty raised by SARS (section 104). (3) requesting a statement of accounts in respect of the tax penalty. (4) paying the penalty immediately and appeal thereafter (“pay now argue later”). QUESTION 11 Which statement is CORRECT? (1) A SARS official must consent to the compromise of a portion of a tax debt when required. (2) A debtor’s request to compromise a portion of a tax debt must be considered by a SARS official on the grounds of administrative justice. (3) The purpose of a compromise is to secure the highest net return from the recovery of a tax debt (section 200(a)). (4) The compromise of a tax debt is to ensure that SARS fulfils the requirements of administrative justice. QUESTION 12 Which statement is NOT CORRECT? (1) A debtor’s request for the compromise of a portion of a tax debt must be considered on the grounds of administrative efficiency. (2) A compromise of a tax debt is to ensure the highest net return from the recovery of a tax debt. (3) A SARS official may authorise the compromise of a portion of a tax debt (section 200 determines that a senior SARS official may authorise the compromise of a portion of a tax debt). (4) The compromise of a portion of a tax debt must be considered on the grounds of administrative efficiency. QUESTION 13 Which statement is CORRECT? A preservation order will only be authorised on the following grounds: (1) A senior SARS official may support and authorise an ex parte application to the High Court. (2) A senior SARS official may only seize achievable assets pending the outcome of an application for a preservation order. ASSIGNMENT 01: SECOND SEMESTER (3) An application for a preservation order must consistently commence within 24 hours from the time of seizure of the assets or longer that SARS and the taxpayer or other person may agree to. (4) All the above statements are true (Section 1 determines which circumstances are applicable for a preservation order to be issued). QUESTION 14 Which statement is NOT a CORRECT statement? (1) A senior SARS official may enter into an agreement with a taxpayer in the prescribed form to pay a tax debt in one sum. (2) A senior SARS official may enter into an agreement with a taxpayer in the prescribed form to pay a tax debt in instalments. (3) The instalment payment agreement remains only in effect for the term of the agreement unless the taxpayer fails to pay an instalment or the financial condition of the taxpayer has materially changed. (4) The termination or modification of an instalment payment arrangement takes effect 21 business days after SARS becomes aware of the taxpayer furnishing materially incorrect information in applying for an instalment payment agreement. (Section 167(6)(b) defines that the termination or modification of an instalment payment agreement takes effect 21 business days after SARS notifies the taxpayer in writing). QUESTION 15 Which is NOT a CORRECT statement? An assessment or decision will only be final if ... (1) it was issued to the incorrect taxpayer who objects to the decision (section 98(1)(a) – if it was not issued to the incorrect taxpayer, the assessment or decision will be final). (2) no objection was made against the assessment or if an objection was withdrawn. (3) the taxpayer is unable to submit the correct return. (4) it was not issued as a result of an incorrect payment allocation. QUESTION 16 SARS will ONLY issue a jeopardy assessment if ... (1) there is a delay in securing an outstanding amount of tax payable to SARS. (2) the tax would otherwise be in jeopardy if the normal due date on which the return was due, was adhered to. ASSIGNMENT 01: SECOND SEMESTER (3) an inference is drawn from the facts such as prima facie evidence together with the fact of dishonesty that the risk of dissipation of assets is great to the fiscus. (4) the grounds for believing that the tax would otherwise be in jeopardy, are provided to the taxpayer (section 96(2)(b) orders that SARS must give the person assessed in the case of a jeopardy assessment, the grounds for believing that the tax would otherwise be in jeopardy). QUESTION 17 Which statement is NOT a CORRECT statement? A notice of assessment issued by SARS must contain the following information: (1) name of the taxpayer and taxpayer reference number or other form of identification (2) date of the assessment and amount of the assessment (3) the tax period in relation to which the assessment is made and the date for paying amounts and penalties (section 96 (1)(f) determines the date for paying the amount assessed and not the date for paying amounts of penalties assessed) (4) a summary of the procedures for lodging an objection to the assessment QUESTION 18 Which statement is NOT a CORRECT statement? A natural person need not register as a tax practitioner if ... (1) advice is provided free of charge to another person. (2) that natural person only receives remuneration for the work done on behalf of the taxpayer (section 240 (1)(b) determines that every natural person who completes or assists in completing a document to be submitted to SARS). (3) he or she provides advice solely as an incidental or subordinate part of rendering a service to another person. (4) that person was removed from a related profession and has been convicted of perjury. QUESTION 19 Which one of the following statements is NOT CORRECT? The requirements for qualifying persons for a valid voluntary disclosure program include ... ASSIGNMENT 01: SECOND SEMESTER (1) a representative acting on behalf of the taxpayer (section 226(1)). (2) that a complete and full voluntary disclosure must be made. (3) that no refund must be due by SARS involving the imposition of an understatement penalty (section 227(e) provides that the requirements for valid voluntary disclosure cannot result in a refund due by SARS). (4) that it must be made in a prescribed form and manner. QUESTION 20 Which one of the following statements is CORRECT? In the event of an understatement declared by a taxpayer, the taxpayer must in addition to the payment of an amount of tax, pay an understatement penalty. The requirements for the paying of understatement penalties are determined by an understatement penalty percentage table. (1) A substantial understatement represents a 50% penalty. (2) If reasonable care was not taken with the completion of a return, a 75% penalty is reasonable in standard cases. (3) In cases of gross negligence, a standard case after notification of an audit will invite a 100% penalty. (4) Intentional tax evasion, if obstructive, will attract a 200% penalty (section 223). END OF ASSIGNMENT 01 COMPULSORY ASSIGNMENT.