SARS coming after these two taxpayers

SARS has seen a surge in compliance-driven revenue to R304 billion, and the revenue service is set to increase its scrutiny on two groups of taxpayers to keep this momentum going.

This was revealed in SARS & National Treasury’s 18th annual edition of the Tax Statistics bulletin, which confirmed the effectiveness of the revenue collector’s compliance-driven initiatives.

SARS celebrates a whopping 16,7% year-on-year compliance collection increase, which it attributed to “enhanced strategies and diligent implementation of compliance measures”.

These targeted strategic initiatives have yielded a rise in revenue collection from R260.5 billion in 2023/24 to R304 billion in the 2024/25 fiscal year.

This is a positive report for the country’s cash-constrained infrastructure, said Tax Consulting SA’s Partner and Head of Strategic Engagement and Compliance, Jashwin Baijoo.

However, he warned that this indicates SARS will double down on targeted revenue collection, focusing on specific taxpayer segments, with crowd favourites being Crypto traders and High-Net-Worth Individuals.

SARS’ weapon of choice, Baijoo said, is historic audits, which have led to astronomical understatement penalties of up to 200% of the tax liability being imposed.

“Since the start of 2025, we have practically seen a significant spike in SARS Audits, which in most cases result in the Audit being Finalised with Adjustments, due to taxpayers missing the Request for Relevant Material.”

“What this means for you is an adverse finding being made by SARS, and manifested in upward adjustments on amounts included in ‘Gross Income’.”

Baijoo said the adjustments often stem from an analysis of taxpayer bank accounts, and where a credit transaction is unexplainable, it is deemed to form part of income.

“Additional taxes are then levied on this upward adjustment amount, which the taxpayer is wholly liable for,” he added.

Current technological advancements and machine learning now also grant SARS access to taxpayer information from crypto trading/investing platforms. This also allows the revenue authority to determine crypto-taxes due.

“It is noteworthy that to give effect to these adjustments, SARS must issue Additional Assessments, which, in extreme cases of non-compliance, may impose ‘Understatement Penalties’ of up to 200% of the tax due.”

Two taxpayers on the chopping block

According to Baijoo, SARS is now issuing Notices of Audit and Requests for Relevant Material across the crypto-verse.

“Those who hold, or have ever held, crypto, should certainly not assume that historical non-declaration means that SARS will not look to tax these profits in future.” A review of historical transgressions will be conducted.

If the crypto trader remains under the radar and does not comply, severe penalties, including jail time, are immediately on the cards, as per Section 234 of the Tax Administration Act.

“Practically, this means that even though taxpayers are requested to make full disclosures to SARS on local and foreign crypto transactions, this is more for verification than data gathering purposes,” Baijoo said.

Taxpayers involved in the cryptocurrency space aren’t the only ones being targeted by the revenue service, however.

High-wealth individuals (HWIs) are known for accumulating their wealth through the navigation of complex, multi-layered investment structures, both locally and offshore.

“Countering these complexities, SARS’ compliance-centric stance confirms that the collection focus on HWIs is intensifying,” Baijoo said.

This is aided by the use of automation and capitalising on data-driven insights to enhance efficiency and accuracy in the detection of tax non-compliance.

“Through its modernisation, SARS has significantly bolstered its capabilities to monitor and address the tax affairs of HWIs, casting its collection net as wide as possible and enabling swift ‘risk detection’.”

To mitigate these tax risks, Baijoo explained that SARS assigned dedicated relationship managers to the wealthy, who are responsible for closely monitoring their tax affairs.

“Through its enhanced surveillance. data-sharing mechanisms, and processing automations, SARS can now detect these offshore assets and ensure they are fully declared.”

“Statistically, the confirmed revenue performance from this segment of society is recorded at R11.76 billion in the last fiscal year. If you think SARS are willing to let that number diminish, you would be sorely mistaken.”

This proactive approach not only ensures compliance, he said, but also helps in the accurate assessment of tax liabilities, thereby reducing the risk of legal repercussions for the taxpayer.

SARS launches wealth seeking missiles

“As SARS continues to upgrade its compliance programmes, taxpayers in the wrong can expect their non-compliance to be both hard and costly,” Baijoo warned.

“Beginning a compliance initiative with the end in mind is something SARS is known for, which may very well be the case here; by ensuring there is full disclosure of all interests, be it in South Africa, offshore, or in the Metaverse.”

By staying informed and proactive in their compliance efforts, Baijoo said both HWIs and Cryptocurrency traders/investors can navigate the tax landscape with confidence, contributing their fair share to the tax collection pot.

Where taxpayers find themselves in a potentially precarious position of having to disclose previously undeclared interests, including crypto assets, the best practice is to seek the assistance of a tax professional.

They will be able to ensure that the best compliance strategy is followed to resolve the taxpayers issues with SARS.

Where a taxpayer has already undertaken the disclosure themselves, and a subsequent audit ensues, Baijoo advised that they enlist seasoned tax attorneys.

They will be able to help navigate the complex nuances of tax legislation will optimise a taxpayer’s compliance, thus preventing potential prosecution and the loss of “luxury” assets.