SARS on a crusade

The South African Revenue Service (SARS) has been on a compliance crusade over the past few years, and this tax season is no exception. Non-compliant taxpayers face punishments ranging from fines to jail time.

“With the list of criminal convictions under SARS’ belt racking up, tax fraud seems to be the year’s flavour,” said Tax Consulting SA’s Head of Strategic Engagement & Compliance, Jashwin Baijoo.

Under section 234 of the Tax Administration Act, South Africans could find themselves behind bars for anything from not paying their tax debts to having outstanding tax returns.

“In the course of filing your tax returns, should you submit any false, incomplete, or misrepresented information to SARS, this too may land you in some very hot water, not unlike the plethora of local celebrities facing jail time or insurmountable penalties,” he said.

SARS has been very transparent in affirming its mandate to collect revenue, which has resulted in a barrage of criminal convictions for “serious tax offences”. Simply put, a “tax offence” can take the form of any contravention of a Tax Act.

The National Prosecuting Authority has teamed up with SARS to hold South Africans responsible for these offences.

“The SARS-NPA team-up has made clear that there are no prisoners of war, only the most targeted career assassinations,” Baijoo said.

“SARS’ zero-tolerance stance on non-compliance is clear. Thinking SARS’ radar is focused only on the high-flyers is likely the last mistake a non-compliant taxpayer should make.” 

SARS Commissioner Edward Kieswetter made this clear in a media statement earlier this year. “The use of technology and data has enhanced SARS’ ability to detect instances of non-compliance,” he said. 

“Taxpayers must not inflate their expenses and under-declare their income to obtain impermissible refunds. Not including rental income is an example. Such actions will potentially make the taxpayer guilty of fraud.”

Baijoo said that Kieswetter’s specific reference to rental income makes it clear that secondary income items are a focal point for SARS’ “compliance canons” this filing season.

“Looking beyond just rental income, ensuring correct disclosure on any interest earned, policies paid out, or even that nightshift for some extra cash, is essential to ensure you are not added to the SARS Snipers’ Hit List,” Baijoo said.

He explained that it was imminent that SARS – while upgrading its systems to modernise the face of tax in South Africa – would be enabled to better prosecute non-compliant taxpayers—“this is the new reality, and compliance is key.”

Baijoo said that to protect yourself from being the next casualty in the war on non-compliance, the best strategy is to always ensure your tax affairs are kept in order, heeding SARS’ warning that non-compliance will be both hard and costly for taxpayers. 

“Where taxpayers find themselves in a potentially precarious position of now disclosing previously undeclared interests or foreign or secondary income, the best practice is to seek the assistance of a tax professional, ensuring the best compliance strategy is followed,” he said.

“Should you already find yourself on the wrong side of SARS, there is a first mover advantage in seeking the appropriate legal counsel, ensuring the necessary steps are taken under legal professional privilege, and providing a degree of protection to your kingdom and war chest.” 

“In most instances of potential conviction on commission of a tax offence, SARS must be engaged legally, and we generally find them utmost agreeable where a correct tax and compliance strategy is followed.”

Baijoo said that, as a rule of thumb, any and all declarations of war received from SARS should be immediately addressed.