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Tax Services

Specific Asset Disclosures Underway…

The South African Revenue Service (SARS) has announced the long-awaited introduction of a “specific asset” disclosure requirement for affluent individuals. Individuals with assets valued at R50 million or more must now provide “high-level” disclosure to SARS. Although this requirement falls below the threshold for SARS’ High Wealth Individual (HWI) unit, it does impose increased reporting and disclosure obligations on affluent taxpayers and their tax services providers.

Upholding Strict Compliance

While some may perceive this amendment to the income tax return form (ITR12) as unexpected, it is important to note that SARS has been signalling this level of scrutiny for several years. As early as 2020, the revenue authority emphasised its efforts to enhance the tax treatment of individuals, including implementing more rigorous verification processes for offshore fund transfers. SARS demonstrated a strong follow-through in April 2021 by introducing the HWI Unit. Subsequently, SARS and National Treasury proposed a new high-level disclosure during the 2022 Budget Review, serving as a comprehensive measure for affluent taxpayers who fall below the inclusion requirement for the HWI Unit.

The current rigorous level of scrutiny therefore aligns directly with SARS’ strategic objectives. This new disclosure provides SARS with the necessary means to intensify audits on taxpayers living beyond their documented means, a practice that the revenue authority has conducted discreetly since the early 2000s.

Understanding the R50m Asset Disclosure

This “asset disclosure” affects taxpayers with a cumulative asset value exceeding R50 million and is subject to compulsory disclosure. This encompasses local and foreign assets and necessitates declaring specified assets, including their cost and market value. SARS has stated that this disclosure requirement is effective immediately, commencing from the beginning of the 2023 filing season, which opened on 7 July 2023.

The objective is to aid SARS in detecting non-compliance or fraud by identifying unexplained wealth. With these disclosures, SARS can access supplementary evidence regarding the origin and valuation of designated assets, enabling them to cross-reference it with previously disclosed information, thereby ensuring the detection and elimination of any non-compliance.

Handle Disclosures With Care!

It is evident that SARS will persist in conducting investigations into the financial affairs of affluent taxpayers. Moving forward, taxpayers who are required to submit this disclosure should exercise caution. If they have a history of non-compliance, they should take appropriate action to remain compliant. Non-compliant taxpayers can greatly benefit from the relief provided by the Voluntary Disclosure Program (VDP), provided they meet the specified requirements set by SARS.

The tax specialists at MMS Group possess comprehensive knowledge of tax administration complexities and have the expertise to support you in maintaining income tax compliance. For professional tax services, please contact our dedicated team.

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