SARS is coming after South Africans who actually pay tax

With just 2.4% of South Africans now paying 77% of all personal income tax, the South African Revenue Service (SARS) is tightening scrutiny on this small, wealthy group of taxpayers.

SARS is intensifying scrutiny of South Africa’s wealthy individuals, signalling a more structured, data-driven compliance approach for the country’s biggest taxpayers.

SARS defines High-Wealth Individuals (HWIs) as individuals with gross assets of R75 million or more.

Although HWIs represent only a small proportion of taxpayers, their income, investment activity, and asset holdings contribute materially to South Africa’s tax base.

“In South Africa, a relatively small group of taxpayers contributes a substantial share of total tax collections,” said Hobbs Sinclair Advisory Managing Director Morné Janse van Rensburg.

“This concentration explains why SARS has formalised its engagement with high-wealth taxpayers and applies a more structured compliance approach to this segment.”

In the 2024/25 fiscal year, SARS collected approximately R1.9 trillion in net tax revenue, a 6.6% increase from the previous year.

Personal income tax remained the largest contributor, accounting for 37.4% of all collections in South Africa. This equates to R729.9 billion.

Over 27 million South Africans are registered for personal income tax, with this number growing steadily by 4% per annum over the past few years.

However, a large number of these individuals do not earn enough to exceed the income tax threshold, with only 9.1 million expected to file returns.

An even smaller number of 7.7 million have their taxable income assessed. This means that a large number of people are at zero income and do not pay personal income tax.

Recent SARS data showed that 80.4% of assessed individual taxpayers had taxable income of less than R500,000.

This means that the vast majority of South Africans fall below the threshold for filing a tax return on employment income. These taxpayers earned 44.1% of the total taxable income and contributed 23% of the tax assessed.

While only 19.6% of the taxpayers assessed by SARS earned more than the R500,000 threshold, these individuals contributed 77% of all personal income tax assessed.

SARS data enables individuals to take this calculation further, with its latest tax statistics showing that 1.51 million South Africans – 2.4% of the population – pay 77% of all income tax.

SARS is coming after wealthy South Africans

SARS responded to this concentration in the country’s tax base by establishing the HWI Unit in April 2021, in line with international revenue authority practice.

Janse van Rensburg explained that the unit focuses on taxpayers with complex financial affairs, including those with:

• Multiple local and offshore income streams
• Trust, corporate and family ownership structures
• Cross-border investment portfolios
• High-value property and luxury assets
• Significant discretionary and lifestyle-related spending

“High-wealth taxpayers typically operate across several structures and jurisdictions,” Janse van Rensburg said.

“From SARS’ perspective, that complexity requires closer monitoring and more detailed engagement to ensure tax positions are accurate and consistent.”

As part of this approach, SARS has expanded disclosure requirements. Taxpayers with assets of R50 million or more are now required to submit a high-level balance sheet reflecting local and foreign assets and liabilities.

This marks a shift towards assessing overall wealth rather than relying solely on annual income declarations.

“This change indicates that SARS is looking at the full financial picture,” Janse van Rensburg added. “Asset growth, offshore exposure and structural arrangements are increasingly reviewed alongside reported income.”

Through international information-exchange agreements and enhanced data-matching capabilities, SARS is increasingly able to identify undisclosed offshore assets.

The tax authority has indicated that around 2,800 South Africans with assets exceeding R50 million collectively hold an estimated R150 billion offshore, underscoring the importance of accurate disclosure.

The HWI Unit operates through a relationship-management model. Qualifying individuals are assigned a dedicated SARS Relationship Manager to coordinate compliance across multiple tax types, manage queries and facilitate consistent engagement.

“Relationship management does not replace enforcement,” Janse van Rensburg said. “It reflects an expectation that high-wealth taxpayers engage properly, respond timeously and maintain defensible tax positions.”

Given the complexity of wealth structures and evolving SARS requirements, HWIs are generally advised to work with both accounting specialists and tax attorneys. This coordinated approach supports:

• Accurate and consistent tax filings
• Appropriate structuring of trusts, companies and offshore holdings
• Effective procedural and legal engagement with SARS
• Reduced the risk of disputes escalating unnecessarily

“Sometimes a tax issue is not an accounting problem, but a legal or procedural one,” Janse van Rensburg explained.

“That’s where accountants and tax attorneys working together can engage SARS effectively and resolve matters efficiently.”

As SARS continues to refine its compliance frameworks and data capabilities, expectations around transparency and alignment remain high.

For HWIs, understanding how SARS assesses total wealth – not just taxable income – is central to managing compliance risk.