{"id":871171,"date":"2026-08-20T15:08:40","date_gmt":"2026-08-20T13:08:40","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=871171"},"modified":"2026-08-20T15:08:43","modified_gmt":"2026-08-20T13:08:43","slug":"sars-three-year-warning-for-taxpayers-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/871171\/sars-three-year-warning-for-taxpayers-in-south-africa\/","title":{"rendered":"SARS three-year warning for taxpayers in South Africa"},"content":{"rendered":"\n

A recent High Court judgment has clarified that SARS can reopen tax assessments older than three years if it proves fraud, misrepresentation, or non-disclosure by the taxpayer.<\/p>\n\n\n\n

Legal experts at Werksmans Attorneys said that the South African Revenue Service (SARS) is generally prohibited from challenging income tax assessments that are more than three years old.\u00a0<\/p>\n\n\n\n

This rule applies unless SARS can demonstrate that the taxpayer was incorrectly assessed due to fraud, misrepresentation, or the non-disclosure of material facts by the taxpayer. <\/p>\n\n\n\n

For SARS to assess tax after the three-year prescription period, two key conditions must be met.\u00a0There must be evidence of fraud, misrepresentation, or nondisclosure by the taxpayer.\u00a0<\/p>\n\n\n\n

This fraudulent or misleading behaviour must be directly linked to the failure to assess the full amount of tax. <\/p>\n\n\n\n

This means that there must be a causal connection between the taxpayer’s actions and the incorrect assessment.\u00a0<\/p>\n\n\n\n

If either of these conditions is not satisfied, SARS cannot adjust income tax assessments more than three years old.<\/p>\n\n\n\n

Werksmans Attorneys’ legal experts explained that determining whether a taxpayer made a “misrepresentation” that allows SARS to skip the three-year prescription period can be complicated. <\/p>\n\n\n\n

The group said that this depends on whether the taxpayer honestly shared a legal opinion, which shouldn\u2019t invalidate the prescription period even if it is wrong, or if the taxpayer deliberately misrepresented facts that led to an incorrect assessment.<\/p>\n\n\n\n

“SARS does not have free rein to reopen old assessments simply because it disagrees with the legal position taken by the taxpayer \u2013 for example, that a particular expense is deductible,” said Werksmans Attorneys.<\/p>\n\n\n\n

“However, taxpayers should take care to make full and accurate disclosure to SARS to ensure that there is no justification for revisiting historical tax assessments.”<\/p>\n\n\n\n

Werksmans Attorneys highlighted the case of SARS versus Meiring Citrus, which involved the High Court overturning a Tax Court ruling regarding the deduction of a premium by the taxpayer, which SARS initially rejected more than three years later. <\/p>\n\n\n\n

The High Court determined that the taxpayer had made a “misrepresentation” by failing to provide essential factual information about the contract underlying the deduction. <\/p>\n\n\n\n

While the Tax Court had ruled that differing legal opinions cannot be interpreted as misrepresentations, the High Court emphasised the importance of disclosing contract terms.<\/p>\n\n\n\n

South Africa’s new tax laws<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

The National Treasury has officially implemented the Taxation Laws Amendment Act of 2024. <\/p>\n\n\n\n

Although the laws were signed by President Cyril Ramaphosa and promulgated in December 2024, they were not active until now.<\/p>\n\n\n\n

This Amendment Act introduces several changes to South Africa\u2019s tax laws, including modifications to the Income Tax Act, VAT Act, and laws governing tax incentives. <\/p>\n\n\n\n

It includes the introduction of incentives for electric and hydrogen vehicles, offering a 150% tax deduction or investment allowance for new investments in these areas.<\/p>\n\n\n\n

Another significant change addresses the misuse of existing incentives, particularly the Employment Tax Incentive (ETI). The ETI was introduced by the government in 2013 to encourage employers to hire young job seekers. <\/p>\n\n\n\n

It reduces the cost of employing young people by sharing costs with the government, without affecting the wage the employee receives.<\/p>\n\n\n\n

The ETI began on January 1, 2014, and is set to expire on February 28, 2029. However, in recent years, the government has had to amend the ETI Act to prevent abuses of the incentive through aggressive tax schemes.<\/p>\n\n\n\n

These schemes often involved training institutions claiming incentives for students classified as employees under the ETI Act.<\/p>\n\n\n\n

However, these students never received cash payouts in their bank accounts. Instead, the institutions would deduct training fees directly from their wages.<\/p>\n\n\n\n

\u201cThe misuse of the ETI for creating fictitious employment, primarily to exploit the incentive, contradicts the policy\u2019s intention,\u201d Treasury said.<\/p>\n\n\n\n

To tackle this issue, the new laws introduce punitive measures that will compel employers caught abusing the system to pay fines to the Treasury.<\/p>\n","protected":false},"excerpt":{"rendered":"

SARS recently clarified that it can reopen tax assessments that are older than three years, if needed.<\/p>\n","protected":false},"author":127,"featured_media":859622,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2090425883412549979","_sma_facebook_post_id":"191437357620492_2181665585987174","_sma_instagram_post_id":"18113572183947079","_sma_x_attempts":1,"footnotes":""},"categories":[23],"tags":[3796,3246,9482],"class_list":["post-871171","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-national-treasury","tag-sars","tag-werksmans-attorneys"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/871171","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/127"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=871171"}],"version-history":[{"count":6,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/871171\/revisions"}],"predecessor-version":[{"id":871202,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/871171\/revisions\/871202"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/859622"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=871171"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=871171"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=871171"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}