SARS issues stern warning to guesthouse owners and landlords

GUESTHOUSE owners and people renting our their property are both required to declare the income for tax purposes.

This is according to a statement issued by the revenue service earlier this month.

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“The South African Revenue Service (SARS) wishes to advise property owners, whose properties are located in South Africa and who host fee-paying guests, that the rental income they receive must be declared in their income tax return.

“This is the same principle that applies to any person who has rental income from letting out their property as a homeowner, placing them under the same obligation to declare such rental income to SARS. A property owner is also required to register as a VAT vendor with the accompanying obligations, if the short-term rental income exceeds R1 million in a 12-month period,” read the statement published on the SARS website on 11 March.

Making it easy to comply 

The statement describes that “early evidence has highlighted the need to focus on improving compliance in this sector of property owners who derive income from fee-paying guests.  Property owners who, to date, have not declared rental income are encouraged to regularise their affairs with immediate effect. There are a variety of ways to comply”.

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“Affected taxpayers may choose to use Voluntary Disclosure Programme (VDP) which offers more favourable terms,” read the statement.

The benefit of using the VDP is that it offers more favourable terms for an assessment in terms of the penalty amount.

Tax cheats face greater risk

The statement further warned that taxpayers who fail to regularise their affairs could find themselves at greater risk should they be selected by SARS for an audit during which more stringent normal processes will apply. 

“Our approach has always been that every taxpayer should pay their fair share,” said the revenue service.

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“We are equally determined to make it hard and costly for non-compliant taxpayers not willing to meet their obligations. We are working hard to improve system capabilities, in order to detect those taxpayers who do not comply by using data to identify risk.”

The VDP unit at SARS can be accessed directly at VDP@sars.gov.za. 

Caxton Local Media Covid-19 reporting