The South African Revenue Service (SARS) has issued an important update for taxpayers, specifically targeting those with annual incomes exceeding R500,000. As tax season approaches, it’s crucial for high earners to understand their obligations and avoid potential legal issues.
Legal Obligations
Failing to submit a tax return to SARS is a criminal offense. SARS has made it clear that they will take swift action against those who do not comply with the law. While some taxpayers are exempt from filing—such as those earning less than R500,000 a year from a single source—most individuals are required to file their tax returns.
Tax Season Dates for 2024
- Individual taxpayers (non-provisional): 15 July 2024 to 21 October 2024
- Auto-assessment notices: 1 to 14 July 2024
- Provisional taxpayers: 15 July 2024 to 20 January 2025
- Trusts: 16 September 2024 to 20 January 2025
Tax season for individual taxpayers (non-provisional) opened on 15 July 2024 and will run until 21 October 2024. Auto-assessment notices circulated from 1 to 14 July 2024. The filing season for provisional taxpayers runs from 15 July 2024 to 20 January 2025, and for trusts, from 16 September 2024 to 20 January 2025.
Consequences of Non-Compliance
For those who have not been diligent about filing their tax returns, SARS is likely to issue a letter of demand. Ignoring this letter can lead to severe consequences. A letter of demand is SARS’ final warning before taking punitive measures, which could include civil judgment or even criminal prosecution.
Non-Submission of Previous Tax Returns
SARS will specify which years have missing submissions, giving taxpayers 21 days to submit outstanding returns.
Failure to comply could result in monthly administrative penalties for each outstanding return.
In extreme cases, non-compliance can lead to summonses and criminal prosecution, resulting in fines or imprisonment.
Audits, Verification or Requests for Information
In some cases, taxpayers may have as little as three working days to respond to audits or information requests. Non-compliance can lead to criminal prosecution, as SARS is committed to pursuing all owed taxes aggressively.
Once the amount owed is determined, taxpayers must pay in full within 10 business days from the issuance of the letter of demand. Missing this deadline could result in asset attachment or empty bank accounts due to enforcement actions by the Sheriff of the Court.
Exemptions and Auto-Assessments
While SARS aggressively pursues non-compliant taxpayers, certain groups are exempt from filing returns. Natural persons or deceased estates are not required to submit a return if their income consists solely of:
- Remuneration (excluding retirement lump sums) not exceeding R500,000 from a single source, with employees’ tax withheld.
- South African interest income not exceeding R23,800 for those under 65, R34,500 for those 65 or older, or R23,800 for deceased estates.
- Tax-exempt dividends for non-residents.
- Amounts from tax-free investments.
- A single lump sum from pension or provident funds, with tax deducted per a tax directive.
However, the above exemptions do not apply to individuals who:
- Receive allowances/advances for business travel, accommodation, or subsistence.
- Obtain taxable benefits from employment or office holding.
- Receive income for services rendered outside South Africa.
Since 2021, individual taxpayers who are auto-assessed by SARS do not need to submit a tax return. The auto-assessment process is completed automatically, provided that the person’s gross income, exemptions, deductions, and rebates are accurate. If taxpayers do not accept the auto-assessment, they must file a tax return.
Closing thoughts
For South Africans earning more than R500,000 annually, understanding and meeting tax obligations is now more important than ever. MMS Group aims to ensure that our clients stay informed about the latest SARS requirements and ensure timely and accurate tax return submissions to avoid penalties and maximize eligible deductions.
Should you require support for your income tax compliance, connect with a member of our team.