This is how much money SARS sniffed out from South Africa’s richest taxpayers

The South African Revenue Service has published its annual report for the 2022/23 financial year, ending March 2023.

While the report features many of the stats and tax data that have already been reported over the months, the document also includes a breakdown of tax collections derived from the revenue service’s specialised units – including the Specialised Audit unit and the High Wealth Individual unit.

SARS has threatened for years to clamp down on ‘wayward’ wealth in the country, including homing in on taxpayers who exhibit lifestyles that do not match up with their taxes while also putting a particular focus on wealthy taxpayers who have more “complex” tax affairs.

The SARS HWI Unit, headed by Natasha Singh, carries a threshold of R75 million, and delves into the tax affairs of individuals or trusts who meet or surpass it.

According to SARS’ annual report, it has been able to draw in R2.7 billion in revenue collections from this unit, representing a growth of 7% (or R169 million) against the previous year.

SARS noted that there are significant “volatility” risks associated with this particular unit and the steadiness of income projections tied to it. This is because the largest contributors to revenues here – personal income tax, provisional tax, estate duties, donation tax, etc – are not fixed.

“These products are based on economic activities that are not fixed, unlike PAYE, for instance, and are often driven by transactions that are not likely to recur, e.g., disposal of shares and where the timing is difficult to predict,” it said.

However, with a R2.7 billion haul, the taxman’s focus on the richest of South African taxpayers is paying off, and expected to delve even deeper as it expands and better-equips the unit going forward.

There are also significant gains being made in SARS’ attempts to draw out revenue from other areas of non-compliance.

According to the service, the Specialised Audit Unit – which aims to improve voluntary compliance of taxpayers and traders by conducting comprehensive civil audits of a complex nature in the SMME sector – drew in another R13.2 billion across more than 4,000 cases of non-compliance.

“These audits address taxpayers and traders who make a conscious decision not to comply. The unit focuses on individuals, businesses, and related entities in the small and medium sector of the taxpayer/trader base operating within the illicit economy,” SARS said.

Lifestyle audits – where individuals lead lifestyles that do not match their tax declarations – saw SARS pull in R232 million over 24 cases.

The revenue service used third-party data to determine the correct declaration amounts.

However, it also used luxury vehicles – both for individuals and companies – as a point of reference to determine non-compliance.

Using this method, it said that over R841 million was assessed in 72 cases based on luxury vehicle trails alone.

“Findings on these cases might not be directly linked to the original risk but can relate to other identified risks and compliance issues,” SARS said.

Other audits that were completed include:

• Under-declaration of Pay-as-you-earn (PAYE) tax – 279 cases, R855 million assessed;
• Religious entities – 16 cases, R27 million assessed;
• Covid-19 PPE corruption – 13 cases, R535 million assessed;
• Employment tax incentive – 84 cases, R818 million assessed;
• Issues in the security industry – 86 cases, R843 million assessed.

Bigger entities also could not escape the taxman’s reach, with SARS reporting that its Large Business and International unit managed to finalise 275 audits and recover R16.6 billion.

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