09 May 2025
Riana de Lange is a freelance journalist and writer with more than 30 years’ experience including many years at several mainstream media houses. She has specialised in business reporting, with a particular focus on the economy, the South African National Budget, automotive industry and health policy.
The tax collection wheels never stop turning.
No sooner had the current financial year started on 1 April 2025 than the 13 000 dedicated South African Revenue Service (SARS) employees were back at the grindstone, working to meet the R2 trillion revenue target set by the Minister of Finance for the year ending 31 March 2026.
This means collecting an average of R9 billion every working day. “We cannot waste a single day,” Commissioner Edward Kieswetter emphasised during the recent 2025 SARS Revenue Announcement.
It is no mean feat, but Kieswetter and his team are eyeing an estimated R800 billion in uncollected revenue that he believes could avert tax increases.
SARS’ 2024/25 Compliance Programme generated R301.5 billion in revenue, Kieswetter said during the Revenue Announcement last month. This amount included:
Dr Albertus Marais, director of disputes and international tax at AJM and a Chartered Tax Adviser with the South African Institute of Taxation (SAIT), says while R800 billion is a high number, taxpayers who have not declared all their income or are not registered as taxpayers owe significant amounts.
“The additional R7.5 billion allocated to SARS over the medium term, will assist them further to find and identify taxpayers who are not fully compliant,” he said.
Kieswetter said SARS will use some of its additional allocation to go after more outstanding tax debt and millions of outstanding returns which can yield an estimated additional R20 billion to R50 billion in revenue.
Diane Seccombe, national head of tax training and seminars in South Africa at Forvis Mazars, says Kieswetter indicated two important areas where SARS expects to collect more money:
Kieswetter said at the News24 Post-Budget Breakfast at least 100 000 people earning more than R1 million are not registered for tax and could bring in an additional R100 billion in revenue.
Seccombe believes SARS’ increased technological capacity will help the tax authority to mine all the information submitted by third parties to ensure taxpayers disclose the correct information on tax returns submitted.
“SARS will access all databases, for example the deeds registry office, the motor vehicle licensing bureau, local and foreign banks and even social media platforms to assist with assessing what assets are owned by whom and whether there are corresponding tax numbers.”
Marais says some people outside the formal tax net are those who engage in crime and some are in sectors of the economy that are heavily reliant on cash, such as small spaza shops and zama zamas.
Kieswetter said SARS is working with the South African Reserve Bank to establish a national instant payment system. This will facilitate instant transactions and reduce the reliance on cash.
Marais explains: “You cannot follow cash. Online transaction systems are more secure, and one can trace transactions.”
Seccombe says SARS is also prioritising taxpayers with offshore earnings. “Too many individual taxpayers still do not understand that each tax year SARS has access to their foreign bank account information and that foreign earnings and capital gains must be disclosed to SARS.”
Kieswetter said during the Revenue Announcement that SARS strives to get high-net-worth individuals to comply voluntarily through its continued focus on trusts, family offices (private wealth advisory firms that serve ultra-high-net-worth individuals) and related entities.
Marais says a special unit within SARS collecting data about South Africans with assets exceeding R50 million is not a witch hunt on affluent taxpayers, but rather a focus on “where the money is”. “These individuals are involved in huge transactions which will deliver significant tax revenue for SARS.”
If the past year’s success in revenue collection is anything to go by, SARS’ specialised audit team will continue their lifestyle audits. A total of 236 lifestyles audits were concluded and consequent assessments yielded R1.8 billion in additional revenue. “Luxury cars and properties are used to mask financial flows, and it is straight-forward blatant money-laundering. The focus on that cannot be enough,” Kieswetter said.
The past few years have seen an increased regulatory focus on trusts to ensure the way trusts report and are taxed is more efficient, Marais says.
Phia van der Spuy, a Chartered Accountant, Chartered Tax Adviser with the SAIT and founder of the digital trust provider Trusteeze, says that SARS estimates there is R60 billion in trust distributions that are not reflected on beneficiaries’ tax returns.
She says SARS asks individual taxpayers to declare on their tax returns whether they are trust beneficiaries and have received distributions. It also requires trusts to specify to whom they made distributions, so it can verify what beneficiaries declare.
The IT3(t) submission for a trust requires the trustees to report any amount in a trust to which a beneficiary acquires a right or that “vests” in a beneficiary in the year of assessment. Communication between trustees and beneficiaries is very important, as beneficiaries must ensure that these amounts are reflected in their tax returns, Van der Spuy says.
SARS will not pre-populate beneficiaries’ tax returns with data from trust returns this tax year, but it may reopen returns to adjust for distributions not reflected. Beneficiaries should check if trust distributions vest and make necessary corrections to their tax returns before accepting auto-assessments, Van der Spuy warns.
The Master of the High Court has counted over 600 000 inter vivos trusts and SARS is expected to start issuing penalties for non- or late submission by these trusts later this year.
SARS believes that most taxpayers are honest and wants to help them meet their obligations by making it easy to do so, Kieswetter said during the 2024/25 Revenue Announcement. However, when taxpayers wilfully abdicate their legal obligation, SARS aims to make it hard and costly for them, he said.
Marais says those using structures such as trusts, should get expert advice to ensure they understand what the law and SARS requires and how to complete tax returns and be fully compliant.
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IT ISN'T ONLY INDIVIDUALS SARS IS AFTER SARS Commission Edward Kieswetter said it isn’t only individuals that SARS is after. While reducing tax debt and outstanding returns for all taxpayers is a key focus, there will also be a focus on high-risk industries such as fuel, alcohol and tobacco where blatant non-compliance is prevalent. SARS has successfully convicted evaders in these high-risk industries reducing a potential prejudice of about R5 billion. Kieswetter said more work needs to be done with companies to reduce under-declaration of transactions or income earned, under-reporting the value and quantity of imports and trade-based money laundering in certain industries. Another focus area is large and international businesses involved in transfer pricing, base erosion and profit shifting schemes, he said. |
Seccombe says if you are aware that your tax affairs are not in order, you should seek professional tax advice and make use of any relief available in terms of the voluntary disclosure programme. If you do not voluntarily approach SARS when you are not tax complaint, the risk of increased penalties and detailed audits is high.
Junaid Bhayla, a tax attorney at Tax Consulting SA and admitted attorney of the High Court of South Africa, explained during a webinar hosted by the CPD Consortium that if you owe SARS taxes for more 30 days after the payment due date, you have a tax debt.
There is no limit on the time period within which you can apply for tax debt relief. If you can demonstrate financial hardship, you can apply for a Compromise of Tax Debt and negotiate for a reduction in the amount owed, including permanent write-offs of interest and penalties.
Alternatively, you can apply for a Deferral of Payment - a payment arrangement allowing you to pay what you owe in instalments over a period of time.
Bhayla said correspondence from SARS, such as a letter of demand for tax debt, should be addressed immediately. You have 10 business days to pay, make an arrangement to pay or dispute the tax owed - to avoid further interest, penalties and legal action.
