Sars is spying on your social media accounts – Here’s why

Social media is an incredibly rich source of information for anyone, from recruiters and now the South African Revenue Service (Sars) as well.

Crypto assets, the taxation thereof, and the collection of data in the digital age were on the agenda at the recent South African Institute of Taxation (SAIT) Indaba.

CEO of JGL Forensic Services Jacques van Wyk discussed the intricacies of investigating tax offenders through lifestyle audits, noting that crypto-assets complicated the investigating processes.

Thanks to crypto existing in a borderless, digital arena, it poses a challenge to tax jurisdictions which are usually limited to federal or state governments, subsequently also making it harder to issue penalties.

While Van Wyk is pro-crypto taxation, he believes that “people are not taking heed of Sars’ warnings”, according to Tax Consulting SA.

He urged Sars to utilise data “and to set the necessary examples, which in turn would nudge those who are purposely non-compliant, to re-evaluate their position on the matter”.

Data collection and Sars

Tax evasion in data-rich environments

Our modern-day selves exist in a data-rich environment which makes it easier than ever to track practically anything. At the other end of the spectrum, it’s also easy to manipulate data.

You might think it’s easy to evade Sars but won’t think twice about showing off your new sports car on social media while still owing taxes.

Tax Consulting SA says: “Tax evaders and career criminals alike have worked hard at finding ways to thwart revenue authorities.”

Third-party data

Thanks to third-party data – which is readily available to Sars thanks to our online habits and our collective dislike of reading terms and conditions before agreeing – Sars can view our spending habits.

“[And] through mutual information-sharing agreements with other countries, they can gain access to an individual’s offshore transactions” as well.

To keep up with the challenges that come with analysing third-party data, former Sars commissioner Mark Kingon said Sars had gone on a massive recruitment drive.

The focus will specifically be on employing auditors and veterans “who can assist with upskilling the younger specialists”.

Lifestyle audits via social media

One of the ways to track tax evasion would be to simply look at someone’s lifestyle and see what they are spending money on – easy to do via social media monitoring.

“The burden of proof ultimately falls on the taxpayer to explain any discrepancies” when said taxpayer is flagged for showing off a lifestyle which is not in line with their earnings.

Earlier this year, Jean-Louis Nel warned high-net worth individuals (HNWI) that the flashy display of their lifestyle on social media could result “in a one-way ticket to jail”.

Tax evasion example: Thabiso Ndlovu

Lifestyle audits via social media are easier than ever, thanks to the “recent amendments to section 234 of the Tax Administration Act No 28 of 2011”, Nel added.

One example was Sars’ preservation order against the Thabiso Hamilton Ndlovu, a businessman with a penchant for luxury cars.

He took to social media to flaunt his recently acquired vehicles to the value of R10.5 million.

Thanks to the information and photos gleaned from his social media profiles, Sars was able to rise to the investigation of Ndlovu’s tax affairs and take the matter to court.