SARS has its eyes on South African bank accounts
SARS is intensifying its efforts against non-adherence, and specialists indicate there's a heightened emphasis on personal taxpayers via revenue enhancement to detect inconsistencies in tax filings.
Tax authorities are asking more taxpayers to explain deposits in their bank accounts in an effort to win the war against non-compliance.
The tax authority's main goal in its 2024/25 annual performance plan is to simplify tax compliance for taxpayers and traders. They also plan to increase penalties for those who intentionally avoid complying with tax laws.
SARS has been using new technology and systems to improve its revenue service. This helps them detect taxes owed and automate the process of submitting returns.
In 2024/25, SARS plans to improve its services by using advanced technology like artificial intelligence, machine learning, and virtual platforms. These upgrades will make it easier for everyone to comply with tax regulations. These advancements will simplify tax compliance for all individuals.
But if someone refuses to follow the rules, SARS will enforce the law strictly. If someone doesn't follow the rules, SARS will enforce the law strictly. They will ensure that everyone follows the rules. Taxpayers who don't follow the rules will face difficulty and expense.
SARS is working on improving how it collects money, with a focus on increasing revenue through revenue augmentation. This strategy is not new.
Revenue augmentation is a process of comparing what a taxpayer declared as revenue in their tax return to the amounts actually deposited into the taxpayer’s bank accounts.
Taxpayers must clarify any discrepancies between the income they report on their tax return and the deposits in their bank accounts. This is necessary for accurate tax reporting. Taxpayers should provide explanations for any inconsistencies to avoid potential audits or penalties. It is important to ensure that all income is accurately reported to the tax authorities.
Unsatisfactory explanations may result in additional assessments, estimated tax amounts, or even significant penalties.
This method allows SARS to easily gather what he calls "low-hanging fruit." It is easy for the taxman, but difficult for the taxpayer to dispute.
For SARS to raise these assessments, all they need to do is look at the deposits and do a quick math calculation.
For the taxpayer to fend off that assessment often takes weeks (fact dependent) of data crunching and evidence collection.
If you don't read the detailed review, SARS may try to collect the amount they claim you owe. Their calculations are often incorrect.
It's important for taxpayers to realize that SARS is continually seeking improved methods to fully comprehend their financial matters and improve on collection of tax.
This includes reviewing movements in their bank accounts, worldwide income, and other assets in or outside South Africa.
SARS’ preliminary revenue collection outcome for the 2023/24 fiscal year noted that where provisional taxpayers have underpaid their taxes, SARS collected R19.3 billion from over 28,000 cases.
The SARS compliance program generated R293.7 billion by March 2024. This was an increase of R61.9 billion compared to the previous year's R231.8 billion.
One of the biggest problems facing small business is that many don't maintain their compliance on a consistent basis and usually find themselves catching up at a high cost, which includes the professional fees of a tax practitioner or accountant as well as the backlog in tax and the accompanying penalties and interest.
Taxpayers are advised to make provision for their taxes before they spend their money because SARS knows how much is flowing through their bank accounts with financial institutions.
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