Taxpayers beware – SARS targeting second incomes
The South African Revenue Service (SARS) is focusing on undisclosed secondary income streams to increase compliance this tax season.
Tax Consulting SA explained that resident taxpayers with secondary income streams are legally obligated to disclose all their income sources.
“Failing to do so can lead to significant consequences, including criminal prosecution,” the organisation warned.
Section 234 of the Tax Administration Act contains a laundry list of criminal offences under a tax act.
“You could find yourself behind bars for anything from submission of a false statement to issuing an erroneous or incomplete document to SARS,” the organisation said.
For South African resident taxpayers, all income earned, whether primary or secondary and regardless of source, must be disclosed to SARS.
“This transparency ensures that taxpayers meet their legal obligations and contribute fairly to the country’s revenue collections,” it said.
“When taxpayers fail to disclose secondary income, they not only breach legal requirements but also risk severe penalties and criminal prosecution.”
On SARS’s website, the taxman reminds taxpayers who receive income from more than one source of employment that the employees’ tax (PAYE) deducted by the respective employers may not be enough to cover their final tax liability on assessment.
The reason for this is the manner in which a taxpayer’s tax liability is calculated on assessment.
The South African tax system is based on adding all a taxpayer’s sources of income into a single sum and applying a progressive tax rate table to determine the taxpayer’s final tax liability on assessment.
A progressive tax rate system means that the more income earned, the higher the marginal tax rate and the more tax is paid on assessment.
By deducting PAYE every month, the employer assists a taxpayer in paying his or her tax liability, determined on assessment, in advance.
When only one employer is involved, the total PAYE deducted monthly should be equal to the tax liability on assessment.
Typically, this should result in no extra tax due on assessment. However, where more than one employer is involved, each deducts the correct amount of PAYE on only the salary they pay.
“When all the sources of income are added together, and the correct tax rate is applied, this may result in an additional amount of tax to be paid on assessment,” SARS explained.
Greylisting

Tax Consulting SA said widespread under-declarations of second income have now been brought into focus more than ever.
It added that this contributes to South Africa’s commitment to meeting the Financial Action Task Force (FATF) standards, particularly in enhancing its Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime.
In 2023, the FATF “greylisted” South Africa after it received poor marks for its efforts to combat money laundering and terrorism financing.
While the country is on course to exit this global dirty money watchlist next year, challenges remain in addressing system shortcomings.
The FATF assesses a country’s compliance on the basis of 11 immediate outcomes, which represent key goals that an effective AML/CFT system should achieve.
Immediate Outcome 7 is for money laundering offences and activities to be investigated and offenders prosecuted and subject to effective, proportionate and dissuasive sanctions.
Currently, South Africa is rated as being “moderately effective” at Immediate Outcome 7.
Tax Consulting SA explained that focusing on the under-disclosure of income streams is key to becoming more effective with this outcome.
This includes escalating investigations and prosecutions of serious and complex money laundering cases.
“It remains crucial for taxpayers to address their tax obligations promptly – the longer you delay, the higher the risk of facing severe penalties, including criminal prosecution,” the organisation warned.
“Proactive measures can significantly reduce your exposure to these risks. There is always reprieve for the aggrieved, where pro-active steps are taken.”
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