South Africans have a secret weapon against SARS

A Tax Diagnostic Report is essential for South Africans, especially expatriates, to confirm their SARS residency status, identify compliance gaps or outstanding obligations, and ensure accurate, penalty-free tax filing.

This is according to SARS compliance specialists at Tax Consulting South Africa, Alex Mahundla and Chrispos Seete.

They acknowledged that for many taxpayers, especially expatriates, managing South African tax obligations from a distance can be complicated.

“Years may pass without any direct interaction with the South African Revenue Service (SARS), and key details like contact information, banking details, and tax number status often become outdated,” they said.

“These issues should not be left by the wayside. It remains the taxpayer’s responsibility to maintain accurate information and ensure their status as a tax resident or non-resident is up to date on the SARS system.”

Mahundla and Seete said the answer is a Tax Diagnostic Report. This report is conducted by specialist tax professionals since SARS status determines how taxpayers should declare and how they will be taxed.

With the 2025 eFiling season currently underway and the taxman ramping up its collection efforts, it is more important than ever for taxpayers to know their SARS status.

“SARS has recently introduced changes requiring taxpayers to confirm whether they are tax resident or non-tax resident when submitting their annual tax returns,” they said.

“Submitting the wrong declaration could lead to compliance issues, penalties, or audits – making it crucial to know your current SARS-held status before you file.”

According to Mahundla and Seete, a Tax Diagnostic Report is the first step in helping taxpayers understand where their status with SARS stands.

“It provides a comprehensive ‘health check’ of your tax profile, identifying any compliance issues, outstanding returns, penalties, or administrative updates required,” they explained.

“Without this insight, taxpayers often make decisions based on assumptions rather than facts, a risky move when it comes to SARS.”

A Tax Diagnostic Report is compiled by investigating the records held by SARS. Mahundla and Seete stressed that this is the surest way to check a status safely without triggering unnecessary interest from the tax authority.

A Tax Diagnostic can reveal important issues

Mahundla and Seete explained that tax diagnostics is an all-encompassing process that can uncover important issues.

It helps confirm whether SARS’ record reflects the correct tax residency status before taxpayers submit their return, which ensures the correct rules and disclosures are applied.

“Remember that South African tax residents are taxed on their worldwide income, while non-resident taxpayers only pay tax on South African-sourced income,” they said.

“Changing your tax residency status with SARS entails a formal process and does not happen automatically when you leave the country.”

It also reveals any non-compliance that could impact future applications such as tax clearance, refunds, or financial emigration.

In addition, it identifies outstanding returns or tax debt. “This requires immediate attention,” Mahundla and Seete stressed. “Even small amounts can grow with interest and penalties if left unresolved.”

Many expatriates also forget to update their personal details, such as addresses, phone numbers, or email addresses, which the diagnostic highlights.

It can further detect inactive or deregistered tax numbers that must be reactivated before submissions or applications can proceed.

Finally, the process ensures that SARS security details are up to date. “This is a security measure implemented by SARS to protect both taxpayers and tax professionals, ensuring that access to your profile is properly authorised,” they said.

The report’s findings can be the basis for a targeted compliance plan for clients with more complex structures, such as those with business interests, multiple income streams, or cross-border tax exposure. This may involve:

• Structuring payments for tax debt
• Submitting historic returns to bring the profile up to date
• Confirming tax residency status to ensure the correct type of return is filed
• Correcting details to ensure SARS correspondence reaches the taxpayer
• Coordinating with a tax professional to avoid future compliance risks

“Knowledge is power when it comes to tax compliance. A Tax Diagnostic Report puts you in the driver’s seat by revealing exactly where you stand with SARS,” they said.

“Armed with this certainty, you can avoid surprises, file your return confidently, and steer clear of costly penalties.”