Judge Dennis Davis has again given his support to lifestyle audits for wealthy South Africans as a means of clamping down on tax avoidance.<\/p>\n
While the government has previously mooted the introduction of a wealth tax, Davis said that this was ‘laughable’ as the South African Revenue Service (SARS) does not have the requisite information on wealthy individuals in the country.<\/p>\n
“I want to predict with confidence that South Africa will not impose a wealth tax in the near future and, if it does, that it will definitely not affect the large middle class,” he said in a Nedbank webinar last week.<\/p>\n
Davis added that a clear definition of ‘wealth’ needed to be established and that lifestyle audits would help with collecting information on the assets of the wealthy.<\/p>\n
Highlighting the importance of lifestyle audits, Davis said that the tax committee recently did a study on a group of people \u201cwith very fancy Ferraris parked outside a hotel\u201d.<\/p>\n
The person he was working with at SARS took down the registration numbers of the 26 Ferraris and looked at how much tax they pay.<\/p>\n
What it revealed was that not one of the owners returned a taxable income of more than R400,000 per year, or R34,000 per month.<\/p>\n
Davis highlighted that it is not possible to fund a lavish lifestyle, like driving an expensive Ferrari, on an income of only R400,000 per year.<\/p>\n
He said SARS\u2019 data shows that only 5,000 South Africans report taxable income of R5 million or more.<\/p>\n
\u201cThat makes no sense to me. I invite people to drive in Sandton, Bryanston, Camps Bay, and Bishopscourt \u2013 you have to be earning significant amounts to afford houses in these areas,\u201d he said.<\/p>\n
He said the country is losing more than R100 billion each year \u2013 around 10% of South Africa\u2019s total tax income \u2013 from people and businesses dodging tax.<\/p>\n