SARS & Your Bank Account
The South African Revenue Service (SARS) has a wealth of data about taxpayers, as evidenced by a recent High Court decision.
The SA Revenue Service triumphed in CSARS v. M after SARS questioned a taxpayer about a discrepancy between what was on their tax return and what was in their bank account. This situation is a classic illustration of how SARS has complete knowledge of your bank account and knows how to use that knowledge against you.
SARS discovered payments from FX Africa as well as deposits made by the taxpayer into his Investec and Nedbank bank accounts. The taxpayer received R8 388 422 of deposits in his accounts for the 2007 – 2010 tax years. However, only R3 897 792 was declared for the four years. Due to the receipts not being included on the tax return, SARS estimated that almost R4.5 million was not disclosed. They added tax, interest, and penalties on the undeclared amount.
Everyone should now be aware that data from businesses like banking institutions, real estate agencies, and vehicle dealerships is not private. Until SARS goes back and investigates the past, this is frequently conveniently forgotten. Always keeping excellent records is crucial. Even in cases when the 5-year record-keeping obligation has expired, higher-income taxpayers hurt themselves by retaining shoddy records.
The taxpayer is responsible for providing documentary evidence when questioned by SARS regarding issues that go back a few years. This is also the reason the court in the most recent instance determined that SARS was proper in raising the taxes — not because SARS demonstrated the accuracy of its assessment, but rather because the taxpayer was unable to satisfy the burden of proof to contradict SARS.
By approaching SARS with a legitimate voluntary disclosure through the continuing Voluntary Disclosure Programme (VDP), which is run by SARS and governed by the Tax Administration Act, a taxpayer can avoid the application of fines. Importantly, a proper VDP application guarantees the taxpayer’s complete immunity from criminal prosecution.
Taxpayers must remember that it is their responsibility to satisfy the burden of proof in determining whether a certain amount is taxable or not.
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Kindly note this article is intended for general information purposes only and does not constitute accounting, tax, nor regulatory related advice. Should you need advice, please contact one of our practitioners.