SARS keeping an eye on international travel and high-end vehicles
The South African Revenue Service is desperate to extract as much money as possible from taxpayers, and the nefarious activities are in the taxman’s firing line.
Although many taxpayers expect minor repercussions such as fines and interest charges, a new protection strategy, with the help of the Hawks, South African Police Service (SAPS), and the National Prosecuting Authority (NPA), is becoming more aggressive over non-compliance.
Amid mounting pressure on tax collections and non-compliance, the entity is actively targeting taxpayers who fail to disclose their taxable income accurately.
The taxman’s efforts have resulted in record tax collection figures, with collecting R2.155 trillion in tax revenue for the fiscal year ended March – R10 billion more than the Treasury had even predicted.
One reason for the increase was the 8% growth in personal income tax (R651 billion), with SARS making a concerted effort to target citizens who avoid their tax obligations or do not submit their returns correctly under the wilful non-compliance category.
Danielle Luwes, tax director at Hobbs Sinclair Advisory, said the revenue office relies on personal information, AI and machine learning algorithms to identify and flag non-compliant taxpayers.
Luwes said that SARS looks at flight activity (such as frequent international travel) and luxury purchases (such as high-end vehicles or luxury vacations) and could execute a luxury audit to verify if an individual displays a lifestyle that does not match the tax return.
“The South African Revenue Service, under the leadership of Commissioner Kieswetter, is a world-class organisation. Through its specialist High Wealth Individual Unit and the Specialised Audit Unit, SARS has managed to achieve record tax revenue,” said Van Luwes.
“We have seen in recent reports of individuals being arrested and imprisoned, which is a serious warning that being non-compliant is a very dangerous place to be.”
Over the 2023/24 fiscal years, SARS was successful in 94 of the 110 cases that were handed down, an 84% litigation success rate.
Say sorry
SARS offers a Voluntary Disclosure Programme (VDP) to individuals, companies, or trusts to voluntarily disclose and resolve their tax matters, as long as they are not under or expecting an audit or investigation from SARS or have reached a request for inflation from SARS.
“Proactively rectifying tax defaults not only brings compliance relief but also significantly lowers the risk of penalties and legal repercussions,” said Luwes.
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