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Pursuit of rich tax cheats could bring in R50bn

Monday, 16 January 2012   (0 Comments)
Posted by: SAIT Technical
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Pursuit of rich tax cheats could bring in R50bn
Business Day - Amanda Visser

THE South African Revenue Service (SARS) has identified 9300 rich people countrywide who are responsible for a revenue shortfall of close to R50bn. Almost 7000 of them have gross income of more than R7m or gross wealth of more than R75m but are not registered as taxpayers. SARS and the Treasury have threatened action against rich individuals who were liable for tax but had decided not to pay. SARS has already identified two individuals, who have agreed to pay more than R200m each in undeclared taxes. SARS said it would also press charges against the two.

Yesterday SARS published findings of its investigation of high net worth individuals. It said only 2300 of the noncompliant taxpayers were registered as taxpayers.Jonas Makwakwa, SARS group executive: audit, said the declarations made by these taxpayers did not conform with the information SARS had gathered from third-party institutions such as banks, the deeds offices, the eNatis vehicle registration system, and information about the selling of art and jewellery. SARS, through its audits of wealthy individuals, has identified trends such as ownership of race horses, wine farms and yachts.

Mr Makwakwa said SARS was recruiting more skilled auditors to attend to more of these cases. SARS learned from discussions with a bank that the lender had about 20000 customers who could afford to invest at least R1m a year, suggesting they had incomes of about R10m a year. Mr Makwakwa said SARS had, through links to eNatis, obtained a list of 453 taxpayers out of the 9300 with luxury vehicles (valued at more than R2m) of whom some declared an annual income of R200000. More than 210 of the luxury car owners declared a low income and 130 declared no income at all. Only 16 of the 453 taxpayers had a reasonable valuation of their assets. Mr Makwakwa said SARS was close to finalising another five cases which have been profiled as high risk.

Johan van der Walt, a director of law firm Cliffe Dekker Hofmeyr, said pressure on taxpayers would increase in the next three years. He referred to the economic growth projected in Finance Minister Pravin Gordhan’s medium-term budget of 3,1% in 2011, 3,4% this year and 4,1% next year, while revenue targets were to grow 7,3%, 9,3% and 11% respectively. "The economic growth is slower than the growth projections for tax revenue and the question one then asks is whether that is positive or negative for tax compliance."

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