SARS warns of penalties as filing season approaches

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Author: Amanda Visser
First published in the Business Day 26 June 2012

The annual tax season for individuals opens again on July 1, with taxpayers facing penalties should they fail to meet any of a series of deadlines set by the South African Revenue Service (SARS).

The estimated target for revenue collections from persons and individuals increased more than 14% to R286bn in the 2012-13 tax year, up from R249,7bn in 2011-12.

Filing season this year comes amid warnings in recent months over taxpayer fatigue and SARS' subsequent drive towards greater compliance, with specific focus on, high net worth individuals, tax practitioners and trade intermediaries.

The tax burden in SA is largely carried by taxpayers with taxable income of more than R400 000.

In the 2010 tax year this group represented less than 9% of taxpayers, but ended up being liable for 54,2% of the assessed tax.

SARS commissioner Oupa Magashula said recently that growth in personal income tax slowed to 5,1% in the 2009-10 tax year, but recovered with growth of 10,6% and 10,3% in the two subsequent fiscal years.

The tax revenue for 2012-13 is expected to grow 11,3%.

Dylan Buttrick, an associate tax director at law firm Norton Rose, remarked that the greatest threat to compliance is not complicated tax structures, or the wealthy "hoarding their tax money".

"Rather, the risk of non-compliance will surely continue to increase when a society, or in our case a small segment, is no longer willing to dutifully sustain the burden of squandered taxes," he said.

However, not everybody could be claiming they were paying their fair share, said BDO tax partner Willem Oberholzer.

There were individuals who ran several companies and accumulated significant assets without ever paying more than R50 000 a year in personal or company tax.

"This is being done through nefarious practices such as double accounting, fictitiously changing the nature of income to liabilities, and rolling income and expenditure through entities that have built up enough credit with commercial banks," he said.

SARS spokesman Adrian Lackay said the revenue service had received more than I-million outstanding tax returns from previous tax years and until the end of March this year collected R1,66bn through administrative penalties for outstanding returns.

Stiaan Klue of the South African Institute of Tax Practitioners warned that SARS had the right to appoint agents to collect outstanding penalty and interest on its behalf.

The first deadline for taxpayers is September 28, the date by which tax returns should be submitted manually, through the post or dropped off at a designated SARS collection point.

Those making use of the electronic filing systems or wishing to file electronically at a SARS branch have until Friday November 23 to do so.

Provisional taxpayers, who have other income such as rental or interest income, have until January 31 next year to file their returns.

Mr Klue said many taxpayers were still unsure about whether they were required to submit a tax return.

Taxpayers earning only a salary of less than R120 000 per annum were not required to submit a tax return.

vissera@bdfm.co.za