SARS is coming after rich South Africans

A new draft law will allow government bodies to conduct lifestyle audits and share data with SARS, significantly increasing scrutiny, penalties and criminal risk for wealthy South Africans with unexplained income or assets.

Many South Africans may be excited to share themselves on social media, purchasing new cars, houses, brand-name clothes, watches, jewellery, or going on overseas trips to exotic destinations.

However, South Africans who have been living life on social media without telling the South African Revenue Service (SARS) may soon be in a world of hurt.

Tax Consulting South Africa’s Head of Tax Controversy & Dispute Resolution, André Daniels, explained that the taxman’s latest legislative change spans at least 14 new government departments that can conduct lifestyle audits.

“This is coupled with mandatory information-sharing across a wide range of state entities, including SARS,” Daniels said.

“This rings alarm bells for many affluent South African individuals with unexplained wealth, as they will be reported not only to the taxman, but also prosecuting authorities.”

The draft General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill was published on 14 January 2026, with public comments due by 13 February 2026.

Among the most notable changes in the Bill, Daniels explained, is the granting of statutory power to the Financial Intelligence Centre (FIC) to conduct lifestyle audits.

The draft Bill defines a lifestyle audit as “an audit to determine if a person’s living standards are consistent with the income from legitimate sources that can be attributed to that person”.

“Once unexplained wealth is identified and reported to SARS, the downstream risks escalate quickly,” Daniels warned.

“These include potentially significant additional tax assessments, understatement penalties of up to 200% of the tax outstanding, and even criminal prosecution.”

He added that the only way to avoid this is to make use of SARS’ Voluntary Disclosure Programme (VDP).

This guarantees a waiver of all penalties, except in instances of gross negligence or intentional tax evasion, and amnesty from criminal prosecution by the Commissioner of SARS.

The wolf at taxpayers’ doors

The FIC is mandated to assist in identifying the proceeds of crime and safeguarding the country’s financial system. It is also obligated to share the information it collects with numerous bodies, outlined in the draft Bill, Daniels explained. These include

• The National Prosecuting Authority (NPA)
• SARS
• The Independent Police Investigative Directorate
• The Intelligence Division of the National Defence Force
• The Special Investigating Unit
• The office of the Public Protector
• An investigative division of a national department
• A supervisory body
• The investigative division of the Auditor-General
• The Border Management Authority
• The Public Procurement Office

“This means that detecting tax non-compliance will not remain within SARS’ ambit alone,” he said. “The tax authority may now effectively have a broad range of state bodies reporting potential non-compliance to it.”

“On the strength of information received from the FIC, all these organs of state can come after you, triggering SARS scrutiny.”

The Draft Bill is clear that the FIC can conduct lifestyle audits of persons prescribed by the Finance Minister at the request of an organ of state, a public entity, or a municipality.

They may do so if they reasonably believe the entity is affected by or has an interest in the information it obtains through conducting such an audit.

“With this widening of powers, the wolf is at the door for individuals who have been living an extravagant lifestyle they cannot justify by their declared income,” Daniels warned.

Anything can trigger a lifestyle audit

Daniels explained that a lifestyle audit assesses whether a person’s standard of living is consistent with income from legitimate sources and formally declared to SARS. “It is not a voluntary process and is typically intelligence-driven,” he said.

“The FIC Act requires a person who carries on a business or an employee who suspects money laundering, terrorist financing, or an unusual transaction to report it to the FIC.”

Under the FIC, all citizens have a responsibility to report suspicious and unusual transactions and behaviour, Daniels noted.

This may include a national department, as well as a colleague or neighbour who suspects something untoward and reports someone anonymously.

“Intelligence, however, comes in many forms. During a discussion on wealth taxes, a SARS official recounted noticing 26 eye-catching Ferraris parked outside a luxury hotel,” he said.

“After recording the registration numbers and comparing them to the owners’ tax returns, SARS found that none had declared annual income exceeding R400,000. This raised red flags as the price tags of the cars run well into the millions.”

SARS Commissioner Edward Kieswetter has also publicly stated that SARS notices social media posts where taxpayers openly boast about expensive vehicles or luxury purchases, which may prompt SARS to look deeper.

“Once intelligence exists and is shared, the scope for remedial action narrows significantly,” Daniels cautioned.

“When an audit is underway, the state is no longer asking questions in the abstract. It is actively testing explanations against data already in its possession.”

One way out for taxpayers

According to Daniels, the VDP remains the most effective tool available to taxpayers concerned that SARS scrutiny may be imminent.

Regulated by the Tax Administration Act, the programme allows taxpayers to come clean and regularise past non-compliance.

“When used correctly and timeously, VDP can provide relief from understatement penalties and amnesty against criminal prosecution,” Daniels said.

“However, it is important to note that the VDP is premised on voluntary and complete disclosure before SARS becomes aware of non-compliance.”

In an environment where multiple organs of state may be sharing intelligence, the risk is not only that SARS becomes aware, Daniels said.

There is also the risk that the taxman learns of any non-compliance indirectly, through information generated outside the tax system.

“Seen in this light, the real message is that lifestyle audits can close the door on VDP entirely,” Daniels added.

“This highlights the importance of engaging with seasoned tax attorneys where a non-disclosure to SARS is suspected, to ensure that VDP relief is timeously secured.”

Importantly, using the VDP is a much better alternative than other options available to non-compliant taxpayers.

The benefit of the VDP is that it allows taxpayers to come forward voluntarily, control the narrative, quantify their exposure, and resolve matters in a structured and legal manner.

This enables taxpayers to benefit from the full waiver of penalties and protection from criminal prosecution.

A lifestyle audit, by contrast, places the taxpayer on the back foot, requiring them to respond to questions framed by government organs and potentially facing parallel criminal, regulatory, and tax consequences.

Daniels stressed that the expansion of lifestyle audits and enhanced information sharing across government signals a more assertive and coordinated enforcement environment.

For taxpayers with historical non-compliance, the real risk is no longer limited to a SARS audit. Now, non-tax intelligence will trigger scrutiny from multiple state bodies.

“Do not think you will get away with it. In this context, the VDP is more important than ever, and the window to act is now – before intelligence gathering occurs, before information is shared, and before questions are formally asked,” he said.