SARS is turning up the proverbial heat on wealthy taxpayers habitually neglecting to declare the full extent of their income to SARS. From lifestyle audits, to targeting individuals based on assets owned, SARS is leaving few stones unturned on its mission to close the net on the wealthy. We catch up with how far SARS has progressed.
Meet SARS HWI
SARS established the HWI (High Wealth Individual Taxpayer Segment) in 2021 as part of its strategic wealth crackdown, targeting what it terms “unexplained wealth”. Its crackdown included targeting those taxpayers that exhibit a disconnect between lifestyle and declared taxable income or who hold assets in excess of R75m in value.
Earlier this year, the unit identified some 1,500 taxpayers for further investigation. While SARS is not disclosing specific details on how it accesses taxpayer additional information, it’s common cause that SARS has agreed protocols with several 3rd party platforms and providers to access financial information at taxpayer level.
When luxury purchases send messages
Financial and other institutions are already legally bound to release taxpayer financial information to SARS, this being a significant enabler in the automated income tax assessment advancements at SARS. With the growing number of platforms accessible to SARS, it has the growing ability to cross-reference information disclosed by taxpayers in their returns, including:
- Verification of NATIS details of luxury vehicles purchased.
- Confirmation with Deeds office records of luxury property purchases.
- And more, including the likes of personal aircraft and luxury yachts.
Where to next
There is no doubting that SARS is on a wealth crackdown and is focusing on finding new methods to track and discourage financial crimes. Unexplained wealth is on the SARS radar as it works at devising new initiatives to target errant taxpayers. Whereas the asset cut-off for HWI individuals targeted by SARS has been R75m to date, SARS has subsequently proposed that all provisional taxpayers with assets above R50m be required to declare the market values of all assets and liabilities in their 2023 returns.
In addition, SARS will also be targeting wealthy South African taxpayers with assets located abroad, if they are not tax compliant in South Africa. It is already looking to the UK for advice on targeting wealth domestically. New initiatives are being tested to target unexplained wealth, specifically wealth acquired through corruption, fraud, tax evasion and/or money laundering.
Calling All Digital Nomads!South Africa continues to be a prime destination for remote work. Not only does our beautiful country offer a favourable climate that attracts digital nomads...
Navigating the Tax LabyrinthEvery year brings a slew of alterations to tax laws, making it a daunting task to stay up to date and comprehend the changing legal landscape. The South...
Buckling Down on Slow ResolutionsFrustrations continue to mount among taxpayers over the lengthy resolution time for disputes with the South African Revenue Service (SARS). These...