You may be wondering what does the taxation regime have to do with HR? Other than your familarity with those slimy tentacles of management, you will experience a richer appreciation of organisational design, performance and reward.
Background to SARS
In 1994 the ANC submission to the Commission of Inquiry into the Tax System, included the astute move of placing the old “Inland Revenue (and possibly Customs & Excise) outside the constraints of the Public Service Commission, and making sufficient resources available to ensure the employment of qualified personnel by the department. “. Subsequently the South African Revenue Service (SARS) was founded as an organ of the state, housed within the public administration, but as an institution outside the public service. This move gave it the autonomy and control to charter a bold course, achieving remarkable success that continues to elude other government departments.
DIY Performance Check
Ideally a performance management system should consistently identify measure and address individual performance. Here are DIY checks with your HR and/or payroll department before the end of this tax year. In December 2006, SARS issued a “Notice to Employers AS-NT-21” – they are experiencing a high rate of rejection due to EMP 202 returns and manual IRP 5 certificates not being completed correctly. The notice then provides guidance on the dull but mandatory rules applicable to these returns. Are there performance bells ringing in your organisation? The second check is whether the guillotine will come down on any individual(s) in the event of a SARS audit. Past experience may be a good indicator of future patterns. The bill for under deduction of employees’ tax, penalties and interest can easily soar into millions yet it is convenient to sweep accountability under the executive carpet. I have seen individuals walking away unscathed with exceptional performance ratings and promotions.
Over the next few weeks, keep an eye out for overzealous SARS employees in the reception area. They are under pressure to deliver their targets before the Budget deadline at the end of March. They are inclined to have visions of you handing over money to them for the slightest trace of tax immorality. Have a heart, their performance ratings and incentives are on the line. If HR and payroll personnel are being obtuse by granting travel allowances indiscriminately, fix it now or invite SARS before they eventually find your payroll.
Tips for Trevor
You still have time to send your tips for Trevor for the 2007 Budget* to “tell the Minister how you think he can improve your life and the economy of the country.”
I provide a rough draft of my ideas:
As a law-abiding citizen of this land, I have never appealed to your good conscience until now and trust that you will earnestly include this submission in your deliberations. In addition to the prevailing deductions for business expenditure, please consider a special tax dispensation for those in HR, tasked with the responsibility of advancing the human spirit: Hiring incompetent employees that we cannot easily fire due to the red tape of labour legislation. Maybe a progressive tax deduction for the cost of carrying them in the organisation until they leave on their own accord. While we are on the labour treadmill, we are spending a massive sum at the CCMA – cost of management time, labour consultants and covert operations by HR. Perhaps a “hardship allowance” over the extended period taken to resolve these sour grapes. Leadership because we don’t have any in our organisation after attending a lifetime of seminars and conferences. Something like attractive fringe benefits for a designated “leader” willing to take charge in our chaos. Deeming expenditure incurred on romantic interests at the place of employment, as a qualifying tax deduction. Some employees routinely spend on flowers, chocolates and gifts without company reimbursement. We would exclude expenditure that leads to high profile sexual harassment cases. After you have legislated the above, don’t forget about the traditional favourite of reducing the tax burden on individual taxpayers.
(HR Future, February 2007)