Foreign Assets And SARS

Foreign Assets And SARS

Each individual taxpayer is allowed to invest R10 million per year offshore if you have a tax clearance certificate. In addition to that, you may invest R1 million per calendar year as part of your discretionary allowance.

Any interest, capital gains and dividends must however be declared to SARS. The days where SARS turns a blind eye to taxpayers’ offshore holdings are history.

SARS is now utilising the Automatic Exchange of Information regime to pin down taxpayers who have not disclosed their offshore investments and a number of taxpayers have already received notices to this effect.

The notice informs the taxpayer that SARS intends to initiate a review of their tax affairs, based on information it received from 87 foreign jurisdictions through the Automatic Exchange of Information, regarding the offshore holdings of South African taxpayers.

In the notice SARS request the taxpayer to confirm that you have offshore holdings and then requires detailed information regarding the amount invested, the nature of the investment and the location thereof. The final question asks the taxpayer to explain why this was not disclosed on their tax return. Failure to respond constitutes a criminal offence.

At this stage you may submit a VDP (Voluntary Disclosure) application, however technically it may not be considered voluntary as SARS have already engaged with the taxpayer. If you receive such a notice it is crucial to contact us immediately.

If you have undisclosed offshore interests and you have not yet received this notice, then you have a small window to file a VDP application with SARS. This application could provide you with amnesty from criminal prosecution and understatement penalties.

If in doubt, do not hesitate to contact us.