{"id":873379,"date":"2026-09-02T14:00:00","date_gmt":"2026-09-02T12:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=873379"},"modified":"2026-09-02T13:56:46","modified_gmt":"2026-09-02T11:56:46","slug":"sars-hits-taxpayer-with-r2-million-penalty-for-tax-return-fraud","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/873379\/sars-hits-taxpayer-with-r2-million-penalty-for-tax-return-fraud\/","title":{"rendered":"SARS nails taxpayer with R2 million penalty for tax return fraud"},"content":{"rendered":"\n

The South African Revenue Service (SARS) has hit a taxpayer with a R3.6 million tax bill, including a R2 million penalty for fraudulent tax return filings.<\/p>\n\n\n\n

The taxman won its case against the taxpayer in August after the taxpayer challenged the reversal of the fraudulent tax return in court.<\/p>\n\n\n\n

According to Tax Consulting SA, the revenue service initially refunded the taxpayer approximately R1.38 million\u00a0based on an incorrectly submitted tax return. <\/p>\n\n\n\n

The taxpayer thought they were in the clear, but SARS’ new AI capabilities picked up a risk assessment, prompting the revenue service to investigate further.<\/p>\n\n\n\n

Legal experts at Shepstone & Wylie noted that the taxpayer, a salaried employee, had submitted revised 2020 and 2021 returns that invented farming assets and expenses and inflated IRP5\/PAYE credits. <\/p>\n\n\n\n

When this had been flagged, SARS asked\u00a0for proof of the farming assets, only to be told that no farming operation existed and no equipment had been purchased.<\/p>\n\n\n\n

The tax refund was reversed, interest was added, and a 150% understatement penalty was imposed for being an errant taxpayer.<\/p>\n\n\n\n

Once the audit was complete, SARS reversed the tax position and raised additional assessments totalling approximately R3.6 million. <\/p>\n\n\n\n

This included the tax owed, interest amounting to more than R141,000 and an understatement penalty of approximately R2.08 million.<\/p>\n\n\n\n

The penalty was imposed at 150%, with SARS categorising the conduct as intentional tax evasion.<\/p>\n\n\n\n

Feeling aggrieved, the taxpayer turned to the courts for help; however, the Tax Court found the law was clear and upheld the SARS penalty.<\/p>\n\n\n\n

No luck in court<\/h2>\n\n\n\n
\"\"<\/a>
SARS commissioner Johnstone Makhubu<\/figcaption><\/figure>\n\n\n\n

Although the taxpayer accepted that the refund was not due, they maintained that the penalty should not stand and pursued the matter through objection, appeal, Alternative Dispute Resolution and ultimately in the Tax Court.<\/p>\n\n\n\n

By the time the matter reached Tax Court, the issue was whether SARS was entitled to characterise the conduct as intentional tax evasion and impose the corresponding 150% penalty.<\/p>\n\n\n\n

The Court found that it was \u201ccorrectly categorised as intentional tax evasion\u201d and that the penalties are mandatory.<\/p>\n\n\n\n

Shepstone & Wylie said the result was unsurprising.<\/p>\n\n\n\n

“The taxpayer accepted that their eFiling credentials were used and that they received the unlawful refund,” the firm said.<\/p>\n\n\n\n

While the taxpayer alleged that an unidentified SARS official had filed the returns, they failed to produce any bank records or a police report to support this.<\/p>\n\n\n\n

Notably, the taxpayer’s account of events had changed, and the allegation of third-party fraud appeared only on appeal. <\/p>\n\n\n\n

“The outcome is unsurprising. The Court followed an evidential route, which is the point worth noting,” the firm said.<\/p>\n\n\n\n

The legal experts noted that the court relied on the eFiling Rules, which require users to secure and not share credentials.<\/p>\n\n\n\n

They also make the registered user liable for transactions under them.<\/p>\n\n\n\n

“The Court rejected the taxpayer\u2019s account as a recent fabrication and found that ‘intentional tax evasion’ was proved on a balance of probabilities,” the firm said.<\/p>\n","protected":false},"excerpt":{"rendered":"

SARS has hit a taxpayer with a R3.6 million tax bill, including a R2 million penalty for fraudulent tax return filings.<\/p>\n","protected":false},"author":10,"featured_media":856917,"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":"2095119811164385396","_sma_facebook_post_id":"191437357620492_2193777004776032","_sma_instagram_post_id":"18157915990495834","_sma_x_attempts":1,"footnotes":""},"categories":[23],"tags":[3246,26379],"class_list":["post-873379","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-sars","tag-tax-fraud"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/873379","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\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=873379"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/873379\/revisions"}],"predecessor-version":[{"id":873397,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/873379\/revisions\/873397"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/856917"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=873379"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=873379"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=873379"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}