Have you recently bought property or livestock? Yes, you have! And the taxman knows. In terms of changes to the Tax Administration Act the South African Revenue Service (SARS) can twice a year obtain information on taxpayers from third parties such as estate agents, attorneys and banks.
In this way SARS can establish whether taxpayers’ financial activities – such as the purchasing and selling of property and shares – correspond with what they declared in their annual tax returns.
The new regulations, which now also focus on trade in cattle and sheep, determines that third parties – such as listed companies, financial institutions and medical aids – must by 31 October this year provide SARS with information about their clients for the first six months of 2013.
Other third parties are, inter alia, persons who trade in livestock, fresh produce, wood products, minerals and gemstones.
The new legislation comes after SARS last year collected R12 billion less in taxes than it had reckoned on.
Michelle Steyn, a Johannesburg tax consultant, says that in terms of legislation anyone who employs people, makes or receives payment on behalf of someone else, or has any dealings with another person or controls the assets of another person, must complete returns to reveal this information to SARS.
Experts say that the new regulations make life difficult for tax evaders.
According to Ettienne Retief, chairman of the tax committee of the SA Institute for Professional Accountants, if you are clever enough you will still find ways of cheating, but from now on it is going to be extremely difficult. He adds that you will no longer be able to hide undeclared income in bank accounts and earn interest on it, and you can no longer use fixed property to cheat.
Steyn says that SARS’s collection techniques are becoming more and more effective and the taxman is now extending his coverage to target especially persons with an income of more than R7? million per year or those who have assets of more than R75? million. The law, she adds, makes it easier for SARS to do more effective lifestyle audits.
Retief’s only concern is that some third parties are possibly going to find it difficult to process the required information.
According to Steyn the new regulations will benefit honest South Africans who are registered for provisional tax. In the past persons had to use approximate amounts on their provisional tax forms and if the estimated amounts were too low, SARS fined them. Because interest certificates and other information must now be provided to SARS twice a year, the provisional tax forms will in future be o much more accurate.
This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.
