SARS is eyeing South African bank accounts

 ·18 Apr 2024

SARS is cracking down on non-compliance, and experts say there’s an increased focus on individual taxpayers through revenue augmentation to sniff out discrepancies in tax returns.

This is according to Unicus tax Specialists founder Nico Theron, who said it seems more taxpayers are being asked to explain deposits in their bank accounts in an effort to win the war against non-compliance.

In its annual performance plan for 2024/25, the tax authority stated that its primary goal is to simplify tax compliance for taxpayers and traders while making it more costly for those who deliberately refuse to comply.

SARS has been building a ‘modern revenue service’ over the years, with the use of new technology and systems that can detect taxes owed and automate the process of submitting returns.

For 2024/25, SARS plans to continue building on this, using advanced technology like artificial intelligence, machine learning, and virtual platforms to make tax compliance easier for everyone.

However, to deal with deliberate refusal to comply, SARS said it would apply the law fully without fear or favour – enforcing compliance and making it hard and costly for taxpayers to remain non-compliant.

As part of this process of sharpening its revenue collection tools, SARS is increasingly focusing on revenue augmentation – although the strategy is not new.

According to Theron, revenue augmentation is a process of comparing what a taxpayer declared as revenue in their tax return to the amounts actually deposited into the taxpayer’s bank accounts.

This mechanism mandates that taxpayers provide justification for any discrepancies between the revenue declared in their income tax return and the deposits detected in their bank accounts.

Unsatisfactory explanations may result in additional assessments, estimated tax amounts, or even significant penalties.

Theron explained that this avenue allows SARS to collect what he called “low-hanging fruit” as the process is relatively effortless on the side of the taxman but very difficult for the taxpayer to defend against.

“For SARS to raise these assessments, all they need to do is look at the deposits and do a quick math calculation,” he said.

“For the taxpayer to fend off that assessment often takes weeks (fact dependent) of data crunching and evidence collection.

“Not going through this extensive line-by-line exercise will most likely result in SARS collecting or trying to collect the amount assessed despite these assessments often (but not always) being ultimately incorrect,” he added.

Taxpayers need to understand that SARS is constantly looking for more efficient ways to understand their affairs comprehensively.

This includes reviewing movements in their bank accounts, worldwide income, and other assets in or outside of South Africa.

SARS’ preliminary revenue collection outcome for the 2023/24 fiscal year noted that where provisional taxpayers have underpaid their taxes, SARS collected R19.3 billion from over 28,000 cases.

It added that the SARS compliance programme contributed R293.7 billion as of the end of March 2024 – an increase of R61.9 billion (26.7%) from the previous year’s R231.8 billion.

Read: Government millionaires laughing all the way to the bank in South Africa

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