Income Tax
A recent letter from SARS to an emigration candidate asked for 12 months of bank statements from ALL banks preceding emigration. To emigrate you need to be compliant with all taxes. In the past, tax compliance was required and easily achieved by completing Income Tax returns as Zero and moving on.
Now SARS have asked for 12 months of transactional history…
Previously, it was only about CGT on the deemed sale of worldwide assets. Has the focus increased to auditing and reviewing for income tax? Will SARS review these statements with the human eye or let computer systems digest and review bank activity for 12 months.
Penalties and Interest
One cannot think of transactions with SARS, without anticipating the infamous default system-driven penalties and interest. It can become expensive to defend penalties and interest raised by SARS.
Often profiles of clients are not compliant and have been left for years. The new integration with banks and the Mutuals may render profiles non-compliant, because of earnings furnished to SARS by the banks. Such profiles often attract system generated disputes and result in penalties and interest being raised.
Administrative penalty for not completing an Income Tax Return
This is one of the toughest penalties raised. For those who have not submitted returns. In fact the below two paragraphs are directly from the SARS website:
The administrative non-compliance penalty for the failure to submit a return comprises fixed amount penalties based on a taxpayer’s taxable income and can range from R250 up to R16 000 a month for each month that the non-compliance continues.
Administrative penalties recur each month that the taxpayer is non-compliant, up to a maximum of 35 months. Each recurring penalty will have a unique transaction number.
Most people have not thought of the above. As always, we encourage tax emigration if it applies to you and when looking at the above – the decision is an easy one.
We welcome your interest to emigrate and look forward to helping you exit the South African Tax system in the correct way.
Article by Fred Akal CA (SA) - Owner and Director of ACS PLUS
Read PART 1 of this article here.
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