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SARS is sending letters of demand to some taxpayers in South Africa – what you should know

Most taxpayers find themselves on edge when submitting their returns for the current tax-filing season, and the reason for the underlying tension could have a lot to do with how they perceive SARS, says André Daniels, tax attorney at Tax Consulting SA.

Daniels said that taxpayers are shocked when they receive a final letter of demand or when they notice that they have a tax debt owing to SARS.

“They are often surprised how quickly matters escalate into a formal or legal matter.

“Most disputes originate when errors occur through taxpayers accepting SARS’ auto-assessments on the e-Filing platform without ensuring the correctness thereof, or when individuals make a simple miscalculation on their returns.”

However, by following the correct procedures, this type of dispute can easily be resolved without incurring additional charges, Daniels said.

“More complex disputes could be resultant from intricate business engagements, working abroad and earning a foreign currency, complicated estates and trusts, or the implementation of new rules or adjustments to the relevant tax acts.

“No matter the nature of the dispute, it is imperative to seek professional advice before engaging SARS in the dispute process, towards alternative dispute resolution, or a mutually beneficial compromise arrangement.”

Not out to take your money 

“In 2020, the South African Revenue Service (SARS) raised 4.34 million personal income tax returns, resulting in more than 520,000 (12%) objections,” said Daniels.

“Over the years, South Africans have become convinced that SARS’ sole purpose is to take their money.

“This, obviously, is done through excessive taxation, or by means of penalties when they are found to be non-compliant – but is that really the case? Is SARS really the terrible institution we are led to believe it is?”

Despite the negativity in the market, SARS, for the most part, is complying with its obligations in terms of the Tax Administration Act, Daniels said.

“Individuals on the cusp of a tax dispute with SARS, or facing litigation in Tax Court, might not have a favourable attitude towards the revenue authority.

“What must be considered in every unique situation, is how the matter became a dispute,” he said.


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