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SARS Now Has More Access To Your Bank Account

Tuesday, 02 October 2012   (0 Comments)
Posted by: Author: Diane Seccombe
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SARS Now Has More Access To Your Bank Account

Tax man to receive detailed bank account information of all bank clientele

Government Gazette no.35090 (the Gazette), issued on 29 February 2012, has fundamentally changed the access that SARS has to every person's bank account information.

The Gazette gives notice that in terms of Section 69 of the Income Tax Act, all ‘reporting institutions’ are required to submit bi-annual returns directly to SARS in respect of all monies "invested with, loaned to and deposited” with the reporting institution, and in respect of interest received by or accrued to any person from the ‘reporting institution’.

The first returns, covering the period 1 March 2012 to 31 August2012, are required to be submitted to SARS by 31 October 2012. Account holders may be lulled into a false sense of security in understanding this to mean that all banks will now simply submit information of all interest paid by the bank to an account holder directly to SARS, instead of the account holder being required to disclose the information to SARS themselves.

Further reading of the Gazette proves this understanding dangerously inadequate:
•Firstly, it is important to note how widely the Gazette defines a ‘reporting institution’. Included in the definition are, for example, all banks (including Post bank), companies listed on the JSE that issue bonds, debentures and similar financial instruments, and organs of state that issue bonds (government bonds).
•Secondly, that the ‘reporting institutions’ must submit returns for both natural persons and, as per the Gazette, ‘other persons’ which will include companies and trusts.
•Thirdly, and possibly of greatest concern, is the information the Gazette dictates each return must contain. Whilst the requirements differ slightly for natural and ‘other’ persons, the issues raised below are common to both.

The returns must disclose the following for all persons: identity particulars and tax reference numbers; the closing balances of the accounts at the end of the relevant six-month period; any interest amounts received or accrued by the persons from the reporting institutions; and (interestingly), monthly totals of all debits and credits to the accounts.

No clarity has been provided on the use SARS will make of this information. However, the information at the very least will assist SARS in identifying all persons who should be registered for income tax and VAT purposes, and the non-disclosure of all receipts and accruals (local and foreign) by registered taxpayers when making provisional payments and submitting returns. The independent verification of information submitted by vendors in their VAT returns will be possible, and vendors may be required to account for the movement in the enterprise's bank account not matching the output and input VAT disclosed in a VAT return.

For many years tax advisers have been plagued by the question from clients not wishing to heed sound tax advice: "Yes, I hear you, but how will SARS know?” The answer now is very simple—in terms of Government Gazette 35090, your bank will have to tell them!

Source: By Diane Seccombe (Taxbreaks)



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