This is all part of SARS' efforts to broaden the tax base.
A major drive for the South African Revenue Service (SARS) under the leadership of new Commissioner Johnstone Makhubu is to broaden the unsustainably narrow tax base.
Current figures show that only 13.2% of taxpayers are responsible for half of the total personal income tax collected.
Attention is focusing on non-compliance by provisional taxpayers, especially those who use trusts and receive income.
“We will continue to focus on how we get that extra rand, that extra billion from our compliance work,” Makhubu said in a recent Moneyweb interview.
The introduction of tough administrative penalties for trusts that fail to lodge tax returns underpins this strategy.
Trustees founder Fia van der Spuy noted that the move signals SARS' determination to close compliance gaps and recover lost revenues.
in the crosshairs
Latest figures show that approximately 300,000 (testamentary and intervivo) trusts are registered with SARS. However, it is estimated that only 180,000 have filed tax returns. The estimated tax gap due to this non-compliance is between R50 billion and R60 billion.
SARS began issuing final demands in February to trusts with outstanding returns for the 2024 and 2025 tax years.
In March, it issued a public notice in terms of the Tax Administration Act (TAA), allowing it to impose monthly penalties on trusts for failing to lodge 2024 and 2025 tax returns. The last date for filing came on 4th May.
According to Tax Consulting SA, the imposition of administrative penalties for non-submission of these tax returns marks “clear and deliberate” pursuit of SARS' stated enforcement agenda.
“The legal mechanism under Sections 210 and 211 of the TAA has been in existence for a long time. What has changed is that trusts are now firmly within its ambit,” the firm said in a statement.
Administrative penalties are automatically imposed on assessed losses or taxable income, and range between R250 and R16 000 (depending on income) per outstanding return per month – for up to 36 months or until the trustee cures the non-compliance.
Van der Spuy advised trustees to focus on tax returns for 2024 and 2025 and submit them as soon as possible. avoid continuous punishment.
Once the returns have been submitted they should start focusing on other outstanding tax returns to prevent future penalties.
“Trustees, accountants and other trust service providers should take SARS seriously and treat the trust as a vehicle that requires more detailed compliance and paperwork than any other taxpayer,” he said in a brief statement.
enforcement through data
The Revenue Service is raising its game when it comes to data collection and use of third-party information. SARS is leveraging third-party information, transaction tracking and inter-agency collaboration to strengthen its enforcement operations.
In interviews since taking over from former Commissioner Edward Kieswetter, makhubu This commitment has been reiterated to increase data usage. He warned that where compliance continues to lag, SARS will step up its integrated enforcement operations.
Tax Consulting SA says the penalty system is “deliberately” designed to increase pressure.
The fixed monthly penalty is not a one-time penalty. It is applied monthly until compliance is achieved and can be applied for up to 36 months.
“In other words, delay increases liability.”
MoneyWeb is awaiting feedback on the amount raised in fines as well as the number of tax returns deposited and still outstanding after the May deadline.
Tax Consulting SA says that all trusts – active, dormant, or dormant without assets – are required to register and lodge an annual income tax return.
“There is no minimum threshold, no inaction exemption, and no tolerance for administrative neglect.”
Van der Spuy had previously warned that the SARS Trust was collecting information on the tax affairs of beneficiaries. He said it may be wise to consider voluntary disclosure where the rules were not previously implemented properly.
This article was republished from MoneyWeb. read the original here.
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