Tax Crime: transgressions and pitfalls to avoid
"The biggest challenge facing SARS is to change the attitude of South African taxpayers, some of whom don’t view the tax system as fair."
AS THE 2017 tax filing season opens on the 3 July, Ilsa Groenewald, Associate Director for tax at the Durban office of BDO South Africa, says care should be taken with completing personal income tax returns to avoid any problems down the line. “The biggest challenge facing SARS is to change the attitude of South African taxpayers, some of whom don’t view the tax system as fair and therefore view their non-compliance as a way to balance the scales in their favour,” she said.
According to Groenewald, attitudes to compliance were shaped by many factors such as social, psychological, economic and business environments. There were several examples of tax crime, the most common of which was under-declaration of income to avoid payment of tax. Next to it was overstating expenses, which resulted in a reduction of tax due or, in many instances, a tax refund. An example of this was inflating the amount of business kilometers travelled during the tax year. Liable taxpayers sometimes did not submit their annual income tax returns; this related to individuals, trusts and corporate returns including registered PBO’s and NGO’s.
“There were several examples of business tax crimes, such as when employers deducted PAYE from their employees’ remuneration but failed to pay it over to SARS. In most cases the employers use this money as cash flow for the business,” she said. “Some businesses do the same with VAT, charging 14% VAT on their goods or services and again not paying this to SARS,” said Groenewald.
Groenewald also urged people to be mindful of these scenarios which could get them into trouble and of others in which they could unintentionally be involved and which should be reported to SARS’s Fraud and Anti-Corruption Hotline on 0800 002870.
“The first was if their employer could not provide them with an IRP5, reflecting their income earned and PAYE paid during the year of assessment. You should also speak up to your employer if you notice significant fluctuations in your tax deductions. Another situation to watch out for was businesses offering a discount for cash purchases and not issuing a receipt,” she said.
Groenewald warned that identity fraud had become a real threat. “Always be extra careful when disclosing your personal details such as your ID number and banking details. Also be mindful of scams and phishing attacks using the SARS logo. If the content does not make sense to you or seems suspicious in any way, it is best to consult your local SARS office or your tax practitioner.”
