SARS warms up to rich South Africans

The South African Revenue Service (SARS) has established dedicated relationship managers for High-Wealth individuals (HWI) to provide top-shelf tax services – but it also means they are under much tighter scrutiny.

According to Tax Consulting South Africa, the new initiative is a shift in how the taxman deals with its high-value taxpayers, offering a more personalised approach to tax compliance and advisory services.

“While the introduction of a dedicated manager appears to offer numerous benefits, the rationale, benefits, and consequences hereof is not clear,” said Tax Consulting.

“The specialized attention from SARS confirms that high-net-worth individuals are under closer scrutiny. The HWI Unit has stated that they are not only about offering support but also ensuring that compliance standards are met to the highest degree.”

SARS is paying increased attention to tax filings and financial activities of South Africa’s wealthy.

The taxman has increased its focus on wealthy individuals in recent years and even established a HWI unit.

HWIs can often accrue wealth through complex, multi-layered investment structures, both locally and offshore, making it harder for SARS to collect.

SARS countered this by using advanced technology to streamline audits and bolster efficiency, with the taxman clawing back R12.5 billion in taxes from the HWI group in 2023/24.

Tax Consulting SA said that it is essential to maintain transparency and accuracy in tall tax-related matters, as any discrepancies or non-compliance could result in major penalties or further investigation.

“One item our practice often sees that taxpayers get wrong, including lesser experienced tax practitioners and accounts, is the statement of assets and liabilities,” the group said.

“This goes to the heart of tax compliance and, once disclosed, is a permanent record that SARS can reconcile against. Especially with the third party data that SARS now receives, any information mismatch triggers automatic attention as SARS is obligated to ask the obvious questions.”

The dedicated manager can assist with inquiries and provide clarity, helping taxpayers stay diligent in their tax planning and reporting.

However, Tax Consulting SA said that the personalised service is a double-edged sword as it also signals that SARS is keeping a closer watch on high-net-wroth individuals to ensure full compliance with tax laws.

“We have also seen that relationship managers are often without real influence, and the moment a matter gets complex, they cannot really cause a matter to be better resolved than the formal processes.”

“While the new service from SARS offers convenience and support, taxpayers should approach it with caution, ensuring that they maintain strict adherence to all tax obligations.”

“The relationship manager is there to help, but the onus remains on the taxpayer to ensure their tax affairs are in order and above reproach.”

South Africans still have time to ensure that their tax affairs are up to date.

Non-provisional taxpayers will have until 21 October 2024 to file their tax returns, while provisional taxpayers have until 20 January 2025.

Trusts will also have to submit their latest tax information by 20 January 2025.

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