Taxpayers get time bump-out for undisclosed foreign assets

The South African Revenue Service (Sars) has made some concessions to assist taxpayers – who are fast running out of time – to disclose their undeclared offshore assets in time.

The deadline for the submissions to qualify for the Special Voluntary Disclosure Programme (SVDP) remains August 31, but taxpayers have been given more time to submit supporting documentation.

The SVDP was announced in the 2016 Budget Speech, and gives taxpayers a final opportunity to regularise their offshore tax affairs.

Globally, banks and financial institutions will be obliged to share account and financial information of their foreign clients in terms of the new common reporting standard to become effective this year. South Africa is party to the agreement with several other tax jurisdictions.

Many tax practitioners have warned that taxpayers underestimate the time it takes to obtain the necessary supporting documentation to make full disclosure in time.

This seems to have played out in practice. Nel Schoeman, associate at Maitland, says the concessions made by Sars and its SVDP unit are significant.

“This opens the door to taxpayers who were still undecided to make use of the opportunity. It also allows time for those who have started the process, but realised they will not get all the documentation in time.”

Members of the South African Institute of Tax Professionals (Sait) have received an alert, noting that where it is impossible to obtain the relevant supporting documentation in time, the unit will accept a reasonable estimate.

However, the unit must be informed about the steps already taken by the applicant to obtain the supporting documentation. It must also be informed of the expected date on which the documentation will be available to the SVDP unit.

Sait says in its alert that the final amounts, together with the supporting documentation, must be made available to the unit as soon as possible after August 31, but before November 30.

The application must be accompanied with an explanation of how the estimate was determined.

Ernest Mazansky, member of Sait’s international tax committee, earlier said it was typical of South Africans to wait until the last minute.

That said, the delays warrant some understanding because the final rules only became clear at the beginning of the year.

“It is not always easy to get the required information in the prescribed format from the foreign banks and institutions,” says Mazansky.

The concessions made by the unit are similar to what Sars and the Financial Surveillance Department of the South African Reserve Bank (FinSurv) did during the 2003 amnesty and 2010 Voluntary Disclosure Programme.

They allowed applicants to put in incomplete applications with nominal amounts, with more detailed information to follow. As long as the basic application was lodged by the deadline, and the financial details were submitted within a reasonable period thereafter, the application was dealt with fully.

Brought to you by Moneyweb