Sars audits surge as collectable tax debts rise to R500 billion
Image: File photo.
With a debt book of R535,9 billion, Sars is looking for any means to expedite seamless collections! Sars can leverage Artificial Intelligence and data-driven insights from 3rd party information, including processing of taxpayer bank statements without any prior warning or consent.
This empowers the revenue collector to now fully capitalise on their legislative power to audit taxpayers based on 'risk(s) detected', typically going back 5 years:
Imagine having historically filed all your tax returns on time, making good on your dues to Sars, only to wake up to a Notification of Audit and Request for Relevant Material – this has become the new normal for many South African taxpayers, be it individuals or companies.
Sars' fully loaded audit arsenal
Since the start of 2025, we have practically seen a significant spike in Sars Audits, which in most cases result in the Audit being Finalised with Adjustments, due to taxpayers missing the Request for Relevant Material. What this means for you is an adverse finding being made by Sars, and manifested in upward adjustments on amounts included in 'Gross Income'.
The adjustments often stem from an analysis of taxpayer bank accounts, and where a credit transaction is unexplained, it is deemed to form part of income. Additional taxes are then levied on this upward adjustment amount, which the taxpayer is wholly liable for.
Current technological advancements and machine learning, now also grant Sars access to taxpayer information from crypto trading/investing platforms, allowing the revenue authority to make a determination on crypto-taxes due.
Video Player is loading.
Play Video
Play
Unmute
Current Time
0:00
/
Duration
-:-
Loaded :
0%
Stream Type LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text Color White Black Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Transparent Semi-Transparent Opaque
Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps
Reset
restore all settings to the default values Done
Close Modal Dialog
End of dialog window.
Advertisement
Video Player is loading.
Play Video
Play
Unmute
Current Time
0:00
/
Duration
-:-
Loaded :
0%
Stream Type LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text Color White Black Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Transparent Semi-Transparent Opaque
Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps
Reset
restore all settings to the default values Done
Close Modal Dialog
End of dialog window.
Next
Stay
Close ✕
It is noteworthy that to give effect to these adjustments, Sars must issue Additional Assessments, which in extreme cases of non-compliance, may impose 'Understatement Penalties' of up to 200% of the tax due!
AI insights spell the end for tax non-compliance
Sars has made significant progress in modernising its systems to detect fraud and enhance compliance, whilst also building its tax collection capacity, and a track record of in-depth Audits when any inkling of non-compliance is detected.
These data-driven insights inform Sars of all transactional records pertaining to specific taxpayers, and using AI, the human resourcing element is significantly reduced in 'risk detection' and subsequent compliance-centric actions.
This collaborative approach enables Sars to gain access to a comprehensive dataset, facilitating more robust evaluations of taxpayers' financial activities, resulting in risk detection, and a subsequent 'Notification of Audit and Request for Relevant Material' being issued.
Taxpayers then have a finite time to respond, before Audit Findings, and subsequent Finalisation, are issued. Non-response could very well spell the end of days for the offending taxpayer!
Do not let a Sars audit be your apocalypse
Where you find yourself facing a historic audit from Sars, it is imperative to ensure a timely response, with all correct supporting documentation. We have seen in the market a number of ill-advised taxpayers seeking the correct counsel only after the fact and paying the price for it, such as when those Additional Assessments are issued post-Audit Finalisation. The nail in the coffin is always the Understatement Penalties, capping at a bank-breaking 200% of the capital taxes due!
As a rule of thumb, all correspondence received from Sars should be holistically addressed by a strong multi-faceted tax, legal, and financial team – the 'A-Team'. In instances of non-compliance with tax laws, legal professional privilege is a must, especially where Sars has suspicion of, or has already detected, 'risk(s)'.
This will not only serve in safeguarding you against potential jail-time but also allow for the correct legal stopper to be put in place, preventing Sars from implementing aggressive collection measures. As compliance specialists, enlisting the correct A-Team ensures taxpayers and their astute practitioners will be correctly advised on the most appropriate solution to ensure the burden of proof is fully discharged in any Audit.
* Baijoo is the associate director and head of strategic engagement and compliance at Tax Consulting SA.
PERSONAL FINANCE
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
IOL News
24 minutes ago
- IOL News
Trump tariffs upon us and the Sarb tightens our belts
President Donald Trump holds a chart on reciprocal tariffs during an event titled 'Make America Wealthy Again', at the White House in Washington, DC. Image: Brendan Smialowski/AFP The South African Government has 'pulled out all the stops' during a flurry of trade delegations and counter offers but is now making arrangements to deal with the expected fallout, including the establishment of an export-support desk that will provide updates and advisory services to exporters, and a rumoured package of Treasury-backed incentives for some affected sectors. Trump tariffs prompt Africa's recalibration These matters are, as always, subject to change. In April the Trump administration announced a 31% tariff on South Africa, which was then suddenly dropped to 10%. Lesotho, somehow, evaded its scheduled 50% tariffs this week, which would have halved its economic growth this year and again the next. Lesotho now faces 15% tariffs, but the damage done by the US here and elsewhere won't immediately be forgotten. In Maseru layoffs have already occurred, and textile manufacturers are energetically looking for new markets. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ Meanwhile, China announced plans to eliminate all tariffs on imports from 53 African states, expressly positioning itself as Africa's preferred trading partner. The global order is being firmly shaken. Who will be best placed to pick up the pieces? Will the Sarb's new inflation anchor drag against growth? After the 31 July SARB Monetary Policy Committee meeting, the Reserve Bank Governor Lesetja Kganyago announced a 25-basis point lowering of the interest rate and that the SARB would be revising its inflation target to 3% from its previous 3–6% range. The revised target makes it unlikely that we'll see any more interest-rate cuts this year, meaning borrowing will remain more expensive than many households and businesses might have hoped. Kganyago emphasised that the SARB expected the new target to enhance credibility with global investors – making borrowing for the state less expensive – and protect the rand (which has fallen to a several-month low nonetheless). StatsSA will release its CPI inflation data around 20 August, which will give SMEs some guidance in terms of input-cost planning in this tightening market. Upcoming indicators will show the effect of uncertainty on business conditions Economic indicators scheduled for release in August will provide useful guidance for SME planning. The S&P Global South Africa PMI announced on 5 August 2025 serves as a single-figure snapshot of operating conditions in the private-sector economy. Recent PMI performance showed improvement to 50.8 in May 2025, marking the first growth since November 2024, and indicating the fastest business activity expansion in four years. The Bureau for Economic Research conducts its quarterly business confidence survey mid-August, with questionnaires distributed to manufacturing, retail, wholesale, and construction sectors. Results, typically published in early September, will influence Q4 2025 business planning. Current confidence levels fell to 40 points in Q2 2025 from 45 points in Q1, remaining below the long-term average of 43 points, suggesting cautious SME sentiment, and who's to blame them. Global government representatives arrive in SA to discuss the plight of the SME Deputy President Paul Mashatile delivered the closing remarks at the Global SME Ministerial Meeting on 24 July 2025 in Boksburg. The event, themed 'Navigating New Business Frontiers', brought together representatives and Ministers from more than 100 countries to 'address the most pressing issues hindering SMEs from reaching their full potential.' Deputy President Mashatile emphasised the importance of the African Continental Free Trade Area Agreement to the continent's entrepreneurial landscape, and of the SME sector in general, but could reference nothing concrete the government was doing to support them, apart from the R100 Billion Transformation Fund touted by Trade, Industry and Competition Minister Parks Tau, with public comment currently being reviewed by the dtic. GNU passes a national budget In some good news, the GNU continues to make its way unsteadily forward, with the National Council of Provinces effectively passing the 2025 National Budget. All GNU partners approved the Appropriation Bill that allowed the budget process to be concluded. When tough conditions prompt pragmatic alignment amongst our political leaders, at least there's some room for optimism. Miguel da Silva, Group Executive: Business Banking at TymeBank. Miguel Da Silva. Image: supplied.
IOL News
24 minutes ago
- IOL News
South Africa's struggle with US trade relations amidst looming tariffs
Analysts say the South African government is wasting time in engaging with US President Donald Trump. Image: AFP Political analysts say the South African government is wasting its time in engaging with US President Donald Trump on beneficial trade and investment relations between the two countries. With a 30% tariff expected to be imposed on South African goods by the US at midnight on Thursday, negotiations were still taking place between the two countries regarding the proposed tariffs. This was after South Africa failed to secure a trade deal with the US last week. President Cyril Ramaphosa has confirmed that he had a discussion with Trump on Wednesday. Presidency spokesperson Vincent Magwenya said the two agreed to continue further engagements on bilateral trade matters. 'President Cyril Ramaphosa held a telephone discussion during the morning of 6 August 2025, with US President Donald Trump on bilateral trade matters. 'The two leaders undertook to continue with further engagements, recognising the various trade negotiations the US is currently involved in. Respective trade negotiating teams will take forward more detailed discussions,' Magwenya said. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading Both the Department of Trade, Industry and Competition (DTIC) and the Department of International Relations and Cooperation (DIRCO) refused to discuss the matter. Meanwhile, a senior government official within the DTIC said officials had sleepless nights with last minute discussions as they tried to avert the tariff hikes, but were keeping the news under wraps so that the talks would not be jeopardised. 'Yes, there has been huge pressure and last-minute talks to try to convince the US government to at least cut the tariffs to 15%, but that is a matter the department would have to confirm with you at a later stage if it succeeds. 'Our government has been working on it, but I can tell you now it does not look good because discussions have started late despite the president having indicated that they have made efforts to reach Trump,' the source said. Political analyst Ntsikelelo Breakfast said the government is wasting its time as Trump is unlikely to listen or be sympathetic. 'The EU has just signed (an agreement on higher tariffs) and who are we to think we can win if they sign. We are in trouble and Trump is not going to forgive us for taking Israel to the International Court of Justice. 'An attack on Israel is an attack on the US. Even Ramaphosa is wasting his time', said Breakfast. Another political analyst, Sethulego Matebesi, said Trump is likely to do what he has done during the Oval meeting with Ramaphosa in May. He said the US President will demonstrate as if he has a sympathetic ear but will do the opposite during engagements. 'Yes, he will provide Ramaphosa with a platform to engage but he will definitely not do as South Africa indicates or requests. I don't think he will change his tone because all factors that led to his decision have not been addressed, from an American point of view South African stands against Israel,' he said. Meanwhile, South Africa's Portfolio Committee on Trade, Industry and Competition expressed concerns about the impact of the tariffs, particularly on automotive, steel and agricultural products, as South African exports will become less competitive in the US. 'These sectors form part of significant value chains that exist between the two countries. South Africa is a crucial supplier of raw materials to many United States supply chains. The country also possesses strategic mineral reserves such as chrome, manganese and gold, from which the United States can benefit. Therefore, the trading relationship with the US offers opportunities for mutual development and growth,' the committee said. However, Minister in the Presidency Khumdzo Ntshavheni said the tariffs against South Africa come into effect with the provisions that tariffs will be reviewed as soon as the two countries reach agreement, or a framework deal is found that benefits both countries. Ntshavheni, who was addressing a post-Cabinet briefing on Thursday, said Cabinet affirmed the government's commitment to finding solutions on the tariffs through negotiations. She also announced that the Cabinet set targeted measures to support the affected industries, including the creation of a support desk that will act as a direct liaison with companies affected by the new tariffs. Ntshavheni added that the desk will also assist with tariff absorption and long-term resilience planning.
IOL News
an hour ago
- IOL News
Ramaphosa speaks to Trump as SA scrambles to avert 30% US tariffs as deadline hits
Presidents Cyril Ramaphosa and Donald Trump held a telephonic discussion amid looming 30% US tariffs, with both leaders committing to continued negotiations to address trade imbalances and strengthen economic cooperation. Image: AFP President Cyril Ramaphosa and US President Donald Trump have spoken telephonically on , Tuesday, August 6, 2025, to further discuss bilateral trade matters. According to the presidency spokesperson Vincent Magwenya, 'the two leaders undertook to continue with further engagements recognising the various trade negotiations the US is currently involved in.' He added, 'Respective trade negotiating teams will take forward more detailed discussions,' emphasising ongoing efforts to resolve trade issues. The 30% tariffs imposed by the United States on South African imports were initially expected to come into effect last week. However, Trade and Industry Minister Parks Tau confirmed that no final trade agreement has yet been reached between the two countries. The tariff increase follows a formal letter from President Trump to President Ramaphosa, demanding that South Africa address long-standing trade imbalances and market access restrictions. The tariff is due to be implemented at midnight. Minister in the Presidency Khumbudzo Ntshavheni provided an update on the framework deal following a briefing on the outcomes of Cabinet meetings on Thursday, August 7, 2025. She said, 'In light of the 30% tariffs against South Africa that are expected to come into effect today, the 7th of August 2025, with the provision that the tariffs will be reviewed as soon as the two countries reach a deal.' She further noted that Cabinet 'affirmed government's commitment to finding constructive and sustainable solutions through continued engagements with the United States of America, including at a presidential level.' On government efforts to bolster negotiations, Ntshavheni said, 'As communicated this morning through the presidency, President Ramaphosa has reached out through a phone call to President Trump yesterday morning as part of bolstering South Africa's negotiation efforts on the trade agreement.' The government remains focused on economic growth to save and create jobs, including 'intensifying diversification efforts and strengthening our global supply chain integration as the country works to expand its export markets to Asia, Europe, the Middle East, and across the African continent to enhance our economic resilience,' Ntshavheni said. Regarding industries affected by the tariffs, she explained that 'government is focusing on demand-side interventions in the impacted industries and targeted interventions to ensure industry stability and safeguarding employment.' These interventions include establishing an export support desk to assist affected companies, measures to help companies absorb the tariff and facilitate long-term resilience and growth strategies to protect jobs and productive capacity, said Ntshavheni. Ntshavheni also highlighted the introduction of a 'localisation support fund for affected companies to contribute to the national effort, and the export and competitiveness support programme, which will include a working capital facility and plant and equipment facility to address short- to medium-term needs across all industries.' She added that the government is 'working with the Department of Employment and Labour on measures to mitigate potential job losses using existing instruments within the Department of Labour's entities that can be adjusted to respond to current challenges.' Following consultations with the Competition Commission, 'a block exemption for exporters has been introduced to enable collaboration and coordination by competitors. A draft block exemption will be published by the end of this week so that the process can be concluded expeditiously, and the information will be found on the Department of Trade, Industry and Competition website,' she said. Moreover, she also said the Department of Trade, Industry and Competition, in consultation with industry associations and export councils, has compiled a South Africa-China Trade and Investment Package 2025-2029 as a basis for economic engagement with China. Ntshavheni detailed that 'on trade, the priorities are on the exchange of top 100 products, establishment of a permanent expo in China, and cooperation to address regulatory measures.' The package, she said, also prioritises investment and industrial development in sectors including 'steel, tyres, automotive, battery manufacturing, pharmaceuticals and medical devices, rail manufacturing, and the digital economy.' On the skills development component, the focus is 'on skills associated with identified priority sectors, including to service and provide after-care maintenance.' She noted that the package was shared with the Government of the People's Republic of China during Deputy President Paul Mashatile's working visit from July 14 to 18, 2025. Mashatile engaged with key Chinese state-owned enterprises and financial institutions and officially launched the South African National Pavilion at the China International Supply Chain Expo to position South Africa as a gateway to sub-Saharan Africa for trade, investment, and industrial cooperation, she said. [email protected] Get your news on the go, click here to join the IOL News WhatsApp channel. IOL Politics
