I stole money: Must I pay income tax on it?

A3Ever heard of a thief declaring stolen money for income tax purposes? Do you think thieves should declare stolen money as part of their taxable income? According to numerous court cases on this issue, stolen money obtained by way of theft, embezzlement or fraud is taxable in the hands of the thief. Another question: can costs incurred for the purpose of stealing and any refunds of the stolen money be deducted from the stolen income?

There are four requirements that must be met for stolen money (whether obtained by way of theft, embezzlement, fraud or any other illegal means) to be taxable in the hands of a thief:

  1. The money must have been “received by or accrued to” the thief.

The phrase “received by” has been interpreted by the courts to mean that the money has been “received by a taxpayer on his own behalf for his own benefit” while the words “accrued to” has been interpreted to mean “to which the taxpayer has become entitled”. For a person to be entitled to an amount of money, does not require the person to have received that amount, but it does require that the person has an unconditional right to receive it. As a thief is not entitled to the money he/she steals, the requirement of “accrued to” is not complied with. However, as the money has been received, the first requirement is met and the stolen money must be included in the taxable income of the thief.

  1. The money received by the thief must be of an “income nature” (as opposed to being of a “capital nature”).

Because the act of stealing money requires intention, active and purposeful planning and organisation, as well as execution by the thief, the stolen money has been actively worked for and is deemed to be of an income nature.

  1. Normally a taxpayer is taxed on income in the tax year in which he/she received the income.

However, there is no time limitation on the period during which SARS may issue an assessment if SARS finds out that a thief neglected to declare stolen income for income tax purposes in the past.

  1. An amount/monetary value must be determined at which the stolen money can be included in the taxable income of the thief.

The method to determine an amount depends on the unique circumstances of each case. Two of the methods that SARS can use are:

  • Tracing the amount of money that has been paid into the thief’s bank account.
  • Comparing the net amount of the growth of the thief’s assets with the income declared by the thief. To arrive at a net growth amount, SARS takes into account the value of income, tax-deductible expenses, and assets and liabilities declared by the thief. If the declared income does not justify the net growth in assets, SARS will reassign a value to the income which can justify the net growth in asset value.

The courts have determined that neither expenses incurred by a thief for the purpose of stealing money nor any refunds of stolen money are deductible from the taxable amount of the stolen “income” when calculating the thief’s income tax liability

Does it pay to earn income by stealing? A thief has a legal obligation to declare “income earned” by way of stealing and is liable to pay income tax on the full amount of the stolen income. No deduction for costs incurred in the production of stolen income nor any stolen amounts refunded will be allowed as deductions for income tax purposes. Include other potential costs like legal fees and stress medication, and the profitability of stealing as a means of generating income becomes considerably less attractive – if the thief gets caught out by SARS. Otherwise, stealing might still be a profitable career choice.

Reference List:

  • Accessed on 21 June 2015:
  • l SARS Interpretation Note: No. 88, Section 5

This article is a general information sheet and should not be used or relied upon 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. Errors and omissions excepted (E&OE)




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IC Marais

Professional experience:

IC Marais is a certified CA (SA) with public sector and private sector technical knowledge based on 5 years’ Public Sector accounting, auditing and financial management experience and 5 years audit, tax and accounting experience. Detailed knowledge of private and public sector accounting and auditing standards (GRAP, IPSAS, IFRS, IAS, ISA) and public sector financial legislation (MFMA, etc.)

He enjoys the outdoors, hunting and fishing.



Professional experience:

In 1995, Schalk started as a trainee at Warner and Newton (which became Moores Rowland in 1997 and then Mazars Moores Rowland in 2007) in Bloemfontein. In 1998, Schalk was appointed as manager at Moores Rowland, where he became a partner in 2003. Schalk received his Postgraduate Certificate in Advanced Taxation in 2006 and in 2009 he received his Certificate in the Administration of Estates.



Professional experience:

Cedric started as a trainee at Warner and Newton (which became Moores Rowland in 1997 and Mazars Moores Rowland in 2007), Bloemfontein, in 1986. After completion of his articles, he joined the Special Investigations Division of the Department of Finance (SA Revenue Services) as a senior inspector from 1990 to 1991.



Professional experience:

Lucha started her career as a tax inspector at the Inland Revenue Department of New Zealand. After this she worked in commerce in Canada, Mexico and the United States.

On her return to South Africa, she completed her CA training contract with us and has been with Newtons ever since. She became a Partner in 2012.

Apart from her CA(SA) qualification she also holds a postgraduate certificate in Advanced Taxation (2005) and has the overall responsibility for training as our Training Officer.