Income Tax Payers Beware!
The South African Revenue Service (SARS) has been implementing its strategic objective of detecting and responding to non-compliance to make it difficult for taxpayers who under-declare their income. In doing so, they have recently announced record-breaking revenue collection figures from their taxpayer audits and investigations conducted during the previous income tax year.
Are you flaunting it?
The days when SARS relied solely on taxpayers’ transparency to disclose their taxable income in tax returns are long gone. The new and advanced SARS now integrates third-party information, including luxury vehicle audits, employee tax incentive audits, and lifestyle audits (and more) to assess whether taxpayers’ income tax submissions meet their reasonableness test.
With taxpayer information increasingly accessible from various third-party sources such as banks, deeds offices, and even social media platforms, SARS auditors can create a comprehensive image of some taxpayers’ extravagant lifestyles to detect discrepancies between the information reported on tax returns and third-party data revealing “hidden” wealth, undeclared earnings and assets.
Once flagged for verification and audit, taxpayers risk facing severe scrutiny and consequences. It is important to note that owning a luxury car doesn’t necessarily mean you’re not fully compliant with tax laws. However, failing to accurately declare your income or assets can result in being penalised by SARS – which can be detrimental to your financial and personal life.
Staying Out of The Limelight
Taxpayers can avoid lifestyle audits, asset seizures, and even criminal charges by proactively and voluntarily disclosing all taxable income accurately to SARS. While non-compliant taxpayers can still address their tax affairs under the Tax Administration Act, taking swift action before SARS is strongly advised.
There are several legal mechanisms for resolving non-compliance with SARS. This includes the Voluntary Disclosure Programme, which involves correcting under-declared taxable income and paying taxes without interest or penalties. Taxpayers may also arrange to repay outstanding taxes in instalments through the Deferral of Payment Arrangement. Furthermore, eligible taxpayers may negotiate a reduction of their tax liability with SARS through the Compromise of Tax Debt mechanism.
Navigating Your Compliance Status
Acting quickly after receiving any correspondence from SARS is crucial to avoid future repercussions for taxpayers. Utilising the skills of the experienced tax professionals at MMS Group, who can navigate the complexities of tax laws and regulations, will assist in ensuring tax compliance, preventing prosecution, and ultimately safeguarding luxury assets. For advice on your income tax matters, please contact our team.
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