SARS is coming after luxury vehicles in South Africa
The South African Revenue Service (SARS) reported a tax yield of R840 million last year from 71 luxury vehicle audits, and it is not slowing down on looking into the assets of wealthy South Africans.
Tax Consulting SA said that the tax authority’s preliminary revenue results announced in early April revealed that 854 strategic taxpayer audits were being conducted during the 2022/2023 tax year, which yielded R5.4 billion in additional revenue collection.
On top of the roughly R800 million from luxury vehicles, SARS managed to pull in R232 million from 4 lifestyle audits.
“This uptick in successful audits is indicative of SARS’ever-increasing compliance drives to tackle under-declaration of income by taxpayers, spurred on by its technological advancements in-house,” said SARS.
Tax Consulting SA said that as part of the SARS 2019 vision statement, it has continued to draw information from third parties to clamp down on under-declared income from taxpayers.
SARS’use of third-party information includes approaching vehicle licensing offices, deeds offices, financing houses, and social media platforms to assess the assets held by a taxpayer.
Based on the data collected, skilled SARS auditors are able to paint a picture of some taxpayers’ lifestyles, said Tax Consulting SA.
With access to more data, SARS can elect to employ its artificial intelligence and data scientists to detect anomalies – comparing information declared by taxpayers and third-party information demonstrating “hidden” assets, added the tax firm.
Tax Consulting SA provided the following example of an inconsistency relating to tax compliance.
“In May 2020… an established Gauteng businessman discovered just how vigilant SARS had become when he posted a social media video of his purchase of five luxury vehicles with a price tag of R11 million. SARS proceeded to perform an investigation which culminated in an asset seizure operation,” said the tax firm.
Compliance is key
Tax Consulting SA said that, ultimately, accurate and honest disclosure of all taxable income to SARS remains the optimal solution available to taxpayers.
“Pro-active voluntary compliance will ensure the prevention of lifestyle audits, asset seizures and potential criminal prosecution.” Edward Kieswetter, the commissioner of SARS, has encouraged taxpayers who have neglected or ignored their tax affairs to come clean to SARS.
There are various legal mechanisms available to non-compliant taxpayers in terms of the Tax Administration Act. However, taxpayers are urged to act swiftly before SARS’hand is forced, said SARS.
Some of the compliance options available to taxpayers include:
- The Voluntary Disclosure Programme, where the under-declaration of taxable income is remedied, and taxes paid while avoiding interest and penalties
- A Deferral of Payment Arrangement whereby any outstanding taxes may be repaid to SARS in instalments
- The Compromise of Tax Debt which enables eligible taxpayers to negotiate a reduction of their tax liability with SARS.
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