SARS coming after these taxpayers

Although South Africa’s tax future still hangs in the balance as the country awaits the postponed Budget Speech, this has not stopped SARS from cracking down on tax compliance.

This is feedback from Tax Consulting SA’s associate director and head of strategic engagement and compliance, Jashwin Baijoo, and tax attorney Junaid Bhayla.

“The unprecedented postponement of the 2025 Budget Speech has left many people uncertain about South Africa’s financial future,” Baijoo and Bhayla said.

They noted that although the budget speech was not delivered, there has been plenty of speculation about key tax changes, including a 2% increase to the VAT rate and, as always, the threat of a “wealth tax” hanging over the affluent taxpayer.

“Amidst the uncertainty, one thing remains clear, the need for tax revenue collection has never been greater,” they said.

In fact, SARS has never taken a harder stance on collecting outstanding tax debts.

For example, the taxman is now targeting crypto traders and has increased scrutiny on Trust reporting.

“While the country may be uncertain of the financial implications and guidance to be shed from the Budget Speech, you can be certain that if you do not resolve outstanding tax debts with SARS, they will come for you and everything you have worked so hard for,” they warned.

Baijoo and Bhayla added that SARS is certain about its collection strategies.

“Picking the lowest hanging fruit 1st, outstanding tax debts are SARS’ prime target, which now includes a new taxpayer segment – cryptocurrency traders, all 5.8 million of them,” they said.

On the one hand, SARS is striving to boost taxpayer compliance and encourage voluntary tax payments, and on the other hand, it is working to make non-compliance difficult and expensive.

“With SARS beginning with the end in mind, it comes as no surprise that letters of Final Demand and Notifications of Audit are being issued across various taxpayer segments, providing both the carrot and stick,” they said.

“Taxpayers have 10 business days on receipt of a Final Demand, to either pay the alleged debt in full, enter into a deferral of payment arrangement, enter into a compromise agreement, or file an objection to dispute the merits of the debt.”

“Where a taxpayer does not dispute the merits of a debt owed to SARS but simply cannot afford to settle the debt in a single payment, tax debt relief options become an attractive saving grace in such times of uncertainty and difficulty.”

According to Baijoo and Bhayla, indebted taxpayers can seek relief on all types of tax debt, whether it is Personal or Company Income Tax, VAT or PAYE.

“We find SARS is often amicable to entering into payment arrangements, permitting indebted taxpayers to settle their obligations over a number of months.”

“The downside is that this payment plan option includes interest and penalties but does protect the taxpayer from collections measures being implemented by SARS and judgments being taken against the taxpayer.”

These payment arrangements give much-needed breathing room for the taxpayer’s finances and protect them against SARS swooping in and draining their bank accounts or taking a civil judgement and blacklisting them.

However, it should be noted that these arrangements do not have a tangible tax debt write-off.

“A Compromise, on the other hand, includes the possibility of fully writing off interest and penalties, together with pushing for a reduction in the capital tax debt amount.”

“This is the preferred solution where the taxpayer cannot afford to settle the outstanding debt amount and experiences true financial hardship beyond just low savings and high debts. This is ultimately the most financially beneficial solution.”

They noted that while several requirements must be met to qualify for a compromise of tax debt, where SARS is approached correctly and legally, it is amenable to large write-offs and reductions to the debt.

“Both agreements must be reduced to writing and signed by the respective parties to give certainty on the amounts and terms of settlement relating to the outstanding debt.”

Baijoo and Bhayla explained that the best strategy for protecting yourself from SARS is to always ensure compliance.

If you find yourself on the wrong side of SARS, though, acting first by getting the right tax advice can help you avoid costly and potentially very minor mistakes and protect both yourself and your finances.

“However, where things do go wrong, SARS must be engaged legally.”

As a rule of thumb, they said that any and all correspondence received from SARS should be immediately addressed by a qualified tax specialist or tax attorney.

This will not only safeguard the taxpayer against SARS implementing collection measures but also, as specialists in their own right, the taxpayer will be correctly advised on the most appropriate solution to ensure their tax compliance.