SARS knows everything about your bank account

 ·20 Jul 2023

A recent High Court case has shown just how much information the South African Revenue Service (SARS) has on taxpayers.

In CSARS v M, the revenue service won big in a case where the taxman challenged a taxpayer on what was on their tax return and bank account did not match.

Tax Consulting SA said that this case is a hallmark example of how SARS knows everything about your bank account and how to use the information against taxpayers.

According to the tax firm, SARS made it easy for the High Court and presented its case as follows:

SARS identified deposits received by the taxpayer into his Investec and Nedbank bank accounts, as well as payments received from FX Africa.

These did not make it to the tax return, and SARS computed that roughly R4.5 million was undeclared. They also charged interest and penalties thereon.

“Everyone now knows that information from financial institutions, estate agents, car dealerships etc, is not confidential. This is often conveniently ignored until SARS goes right back and digs into the past.”

To stay on top of this, Tax Consulting SA said it is key to always retain exceptional records. Even where the 5-year record-keeping requirement has passed, taxpayers with higher incomes do themselves no favours by not keeping impeccable records.

When questioned by SARS on matters that date so far back – the taxpayer bears the burden of evidentiary proof.

This is also why in the recent case, the court decided that SARS was correct in raising the taxes – not because SARS proved its assessment was correct, but because the taxpayer could not discharge the legal burden of proof.

A taxpayer can avoid the imposition of penalties by approaching SARS with a valid voluntary disclosure through the ongoing Voluntary Disclosure Programme (VDP) administered by SARS and regulated by the Tax Administration Act.

A valid VDP application also importantly ensures that the taxpayer enjoys full immunity from criminal prosecution, Tax Consulting SA said.

Taxpayers must keep in mind the fact that they have a duty to discharge the burden of proof in respect of proving whether an amount is taxable or not.

“A prudent taxpayer will thus always ensure that they keep adequate documentation in order to discharge the burden of proof,” Tax Consulting said.

Read: D-Day for interest rates in South Africa

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