Latest news with #Sars
IOL News
13 hours ago
- Business
- IOL News
Point of view: understanding the impact of eFiling fraud on South African taxpayers
Discover the troubling findings of the Tax Ombud's eFiling Profile Hijacking survey, revealing the extent of fraud affecting South African taxpayers and the urgent need for improved security measures. Image: Ziphozonke Lushaba / Independent Newspapers The latest findings from the Tax Ombud's eFiling Profile Hijacking survey paint a stark picture of the vulnerabilities within South Africa's tax system. The Tax Ombud, Yanga Mputa, presented these findings this week. The numbers alone tell a worrying story: nearly half of the respondents were registered tax practitioners, while a significant portion, 32.7%, were individual taxpayers. The hijacking of tax profiles is not a minor inconvenience; it is a direct assault on the integrity of Sars, the security of taxpayers, and the trust that businesses and individuals place in the tax system. Alarmingly, a significant portion of those surveyed had firsthand experience with eFiling hijacking, with 41% reporting that they encountered this form of fraud. Meanwhile, 38% of tax practitioners had clients who fell victim to it, and 21% had witnessed it happening to someone else. These figures highlight that this is not a niche issue affecting a handful of unlucky taxpayers—it is widespread and systemic. The types of tax affected provide further insight into the nature of these attacks. Personal Income Tax was the primary target, making up 65% of reported cases, followed by VAT at 20% and Company Income Tax at 15%. This underscores the fact that individuals, rather than corporations, bear the brunt of eFiling fraud. The financial implications are severe: fraud amounts ranged from sums below R10 000 to staggering figures exceeding R1 million. For many victims, this is not just a bureaucratic headache, it is financial devastation. What is even more concerning is the response-or lack thereof—from authorities. More than half (52%) of the respondents did not report the matter to the police, and an additional 23% did not even know if they should. This raises critical questions about law enforcement's ability to assist victims and deter perpetrators. Even among those who did report their cases, the question remains: What action, if any, was taken? The survey further reveals the enabling factors behind these fraudulent activities: internal fraud and insider involvement, a lack of cybersecurity safeguards, system vulnerabilities, and ineffective response mechanisms from Sars itself. The fraudulent modification of banking details adds another layer to the crisis, demonstrating how easily financial data can be exploited. There is an urgent need for improved security measures and greater education and awareness of the risks. Sars, the institution tasked with protecting taxpayers, does not emerge unscathed from this report. While 71% of respondents attempted to report their cases to Sars, only 11% found the response to be effective. A staggering 89% of those affected indicated that Sars' intervention did little to resolve the issue. The failures range from a lack of communication and responsiveness to inefficiency and delays. Improved security measures, more thorough investigations, and a strengthened customer support framework should be the starting point. The most damning statistic of all is the assessment of Sars' communication and interaction following the discovery of fraud: 82% of respondents found it inadequate and ineffective. The victims of eFiling hijacking deserve better, swift action, transparency, and assurance that their financial records are secure. The findings of the survey make it clear: eFiling hijacking is a pressing issue that demands immediate attention. Addressing this challenge effectively is crucial to maintaining confidence in the tax system and ensuring taxpayers feel secure. Sars has an opportunity to strengthen its processes, enhance its responsiveness, and implement robust measures that protect individuals and businesses alike. By taking decisive action, it can reaffirm public trust and demonstrate its commitment to safeguarding taxpayer information. A proactive and transparent approach will go a long way in preventing further exploitation and ensuring the integrity of the system. * Maleke is the editor of Personal Finance PERSONAL FINANCE
IOL News
a day ago
- Business
- IOL News
Understanding property inheritance: essential insights for heirs
Learn the complexities of property inheritance, including how marital regimes affect your rights, the role of executors, and essential steps for a smooth transfer of property to heirs. Image: File If you plan to bequeath immovable property in your Will, be mindful that the process can be complicated. As the owner of immovable property, it must transfer to another person upon your death, either through intestate succession or as stipulated in your Will. If you nominate an heir in your Will, your appointed executor will oversee transferring the property to the beneficiary's name. However, your marital regime may restrict your freedom to distribute immovable property, making it crucial to fully comprehend how your marital contract influences your property rights. For instance, if you are married in a community of property, only 50% of the joint estate is yours to bequeath. This means that your surviving spouse will remain a one-half share owner of the fixed property. If you are married out of the community of property with the accrual and intend to bequeath your property to a third party, bear in mind that your surviving spouse's claim for their share of the accrual could necessitate the sale of your fixed property, which could complicate matters. From a cost perspective, where the fixed property is transferred to another person by way of inheritance, whether testate or intestate, no transfer duty is payable, and Sars will issue a transfer duty exemption certificate upon application by the transferring attorneys. However, keep in mind that your deceased estate remains responsible for the conveyancing costs, Deeds Office fees, rates, and levy clearance certificates. Transferring property from a deceased estate is complex, requiring careful handling by your executor, who typically outsources this to conveyancing attorneys. As an asset in your estate, your property must be reflected in the Liquidation and Distribution (L&D) Account, and no transfer of fixed property can proceed before the L&D Account has undergone public inspection and approval by the Master. Further, the conveyancing attorneys must lodge special documentation at the Deeds Office demonstrating rightful heirship and compliance with Section 42(1) of the Administration of Estates Act. If your property carries a home loan and the appropriate bond cover is in place, your executor will utilise the life cover proceeds to settle the bond, allowing your heir to inherit an unencumbered property. Without such cover, your executor may need to liquidate other estate assets to repay the bond, as debt settlement is a priority in estate administration. If your heir is intent on taking ownership of the property, they can apply to take over the existing home loan, although they will need to meet the bank's qualifying criteria to do so. If your beneficiary is not in a position to take over the home loan or chooses not to, your executor may sell the property out of the estate at market value. In such circumstances, your executor is responsible for signing the Offer to Purchase and all other transfer documents. Further, the transferring attorney must obtain a certificate from the Master verifying that they have no objections to the transfer. Additional complexities can arise if your heir is a minor and no testamentary trust has been established in your Will. Since minors (under 18) cannot legally own property, the executor must seek permission from the Master to sell or manage it on the minor's behalf. Without a trust, the minor's legal guardian will be responsible for administering the property until the child reaches adulthood. However, the guardian faces certain limitations in this regard, notably requiring the Master's consent to sell the property, contingent on proving it serves the minor's best interests. Where the fixed property is left to your minor in a testamentary trust, the trustees will be responsible for administering the property on behalf of your minor children, and this is generally speaking a much more favourable method of leaving fixed property to minors. To facilitate a seamless transfer of property upon your death, regularly update your Will and maintain current records of home loans, bond cover, municipal accounts, utility bills, and title deeds. Diligent planning in bequeathing immovable property can safeguard your intentions, mitigate disputes, and streamline estate administration for your beneficiaries. * Tapfuma, CFP, is an associate financial planner at Crue Invest. PERSONAL FINANCE
The Citizen
2 days ago
- Business
- The Citizen
Looming tax deadline and glitches cause frustration
Additional measures were implemented to help taxpayers stay compliant – and if not for the 'procrastinators' the problem 'could have been fixed' by now. The chances of an extension to Friday's deadline are slim. Picture: AdobeStock In the run-up to this year's filing season, employers are battling to meet the deadline for submission of their annual employer reconciliation declarations to the South African Revenue Service (Sars). The deadline is Friday. Employers experienced glitches after Sars released an updated version of e@syFile, the software used to reconcile and validate the payroll data and electronic employee tax certificates submitted to Sars. Employers submit monthly declarations, and the annual declaration (EMP501) reflects all the payments made in terms of employee pay-as-you-earn (PAYE) tax, Unemployment Insurance Fund (UIF) contributions, and employee tax incentive (ETI) and skills development (SDL) levies. ALSO READ: 'Sars needs to play catch up,' says Kieswetter as tax collector goes digital System issues The system error forced Sars to make additional channels and measures available to enable employers to submit their information on time, says Ettiene Retief, independent tax specialist. The new version created 'unexpected' issues where employers were unable to submit their EMP501 returns. Following complaints from several recognised controlling bodies that represent tax practitioners, Sars acknowledged the problems. It gave employers access to the older version when they could not solve their issues with the new version, and addressed issues through a dedicated email support channel. Retief says the newer version might have been incompatible with specific anti-virus programmes used by employers or tax practitioners. System updates by employer payroll systems may also have caused the incompatibility with e@syFile. 'There are also procrastinators. We have had two months to deal with issues – if people started engaging earlier, the problem could have been fixed already,' he adds. ALSO READ: Sars beats expectations by collecting R1.855 trillion in 2024/25 tax year The go-between The Sars e@syFile software plays 'middleman' in the validation and reconciliation of the employer's payroll system and the validation of the electronic IRP5 tax certificate that is submitted to Sars. This enables Sars to pre-populate the tax returns of almost four million individual taxpayers, and those with more complicated tax affairs can submit their tax returns with correct tax information. According to Sars, the three elements that must reconcile for employer submissions include: Monthly employer declarations submitted (PAYE, SDL, UIF and ETI); Payments made (excluding penalty and interest payments); and IRP5/IT3(a)s generated. The chances of an extension of Friday's deadline are slim. Sars only has a month to process the information and start pre-populating tax returns for the start of the July filing season. 'If one deadline moves, it moves everything and that causes its own complications,' says Retief. Another system glitch that frustrated taxpayers and practitioners last month was the inability to upload documentation relating to value-added tax (Vat) returns. 'As far as I am aware the issues were addressed.' ALSO READ: Sars records increase in taxpayers who filed returns Refund delays André Daniels, head of tax controversy and dispute resolution at Tax Consulting SA, says taxpayers and tax practitioners alike are reporting a surge in delayed refunds. Sars is citing 'pending verifications or audits' – but only after a manual status check is performed. 'This is not a procedural glitch – this is a systemic failure with serious financial implications,' Daniels said in a recent statement. In many cases Sars has requested further verification documentation without issuing any formal notification through eFiling or via email. 'Making matters worse, there is often no link available to upload the required documents because no verification or audit letter was ever generated.' Daniels says even if the link is provided and documentation uploaded, additional assessments are subsequently issued, stating that the 'burden of proof' was not discharged. His advice to taxpayers is to act proactively and to confirm whether any verifications or audits have been raised behind the scenes. He also advises taxpayers to use the dispute resolution steps to correct assessments where appropriate. Retief notes that Sars is constantly upgrading, adding and changing its systems and programmes as part of its modernisation and digitalisation drive. It is normal that there will be glitches. Sars is generally alerted to problems and issues through the different representative bodies. 'I know there were issues, but Sars was quick to respond and solve some of it.' This article was republished from Moneyweb. Read the original here.
IOL News
4 days ago
- Business
- IOL News
Cosatu warns One Stop Border Bill's silence on illegal migration and exports threatens jobs
The Oshoek border post. In a Time Release Study (TRS) conducted jointly by the South African Revenue Service and the Eswatini Revenue Service last year, the turnaround time for trucks exporting cargo to Eswatini at the Oshoek/Ngwenya port of entry in Mpumalanga had been reduced from 1 hour 42 minutes to just 10 minutes. Image: Timothy Bernard/Independent Newspapers Cosatu has said the proposed One Stop Border Bill's silence on the uncontrolled explosion of illegal migration and exports flooding into South Africa threatens local jobs, businesses, value chains, and revenue needed to fund public services. This is as the federation also criticised the Department of Home Affairs' reneging on an agreement to table the Bill at Nedlac for engagement with social partners. In submissions to the Portfolio Committee on Home Affairs on the One Stop Border Bill on Tuesday, Cosatu, along with the Catholic Parliamentary Liaison Office, raised concerns about the rampant corruption at various border posts. Cosatu Parliamentary spokesperson Matthew Parks said administrative areas of concern included the silence on specific roles of the Border Management Agency (BMA), South African Revenue Service (Sars), the South African Police Service, and the SA National Defence Force. Parks said the respective legislative mandates need to be affirmed, upheld, and stated clearly in the Bill to ensure attempts by the BMA to usurp the constitutional role of Sars or any other separate state institution are not allowed to happen, even by default, as well as to control corruption at the border posts. "We are worried by the impression created by the Bill that it seeks to fast-track the movement of goods at border posts. This may have the unintended consequence of telling Border Management Authority and Sars officials at the border posts to waive collecting customs due to the state. Collection of customs duties is not merely to ensure the state receives taxes due to it, but also to ensure tariffs put in place to protect fragile local industries, businesses, value chains, and jobs are enforced," Parks said. Parks warned that the government should not be in the business of undermining Nedlac, as it makes the life of stakeholders and parliamentarians easier when issues are presented with already agreed-upon resolutions. "There is real value in Nedlac. As Business and as Labour, we share many values about fixing the state capacity to provide quality public services that labour and businesses require, and economic growth is linked to this. We are having engagement at Nedlac to build that cohesive state and social partners to build those social compacts," Parks said. Cosatu also warned against expediting the process of opening up the country to goods and people without proper safeguards, citing the 1990s when the country opened its borders too quickly for goods, and hence a flood of Chinese T-shirts, goods, and clothes caused 100 000 job losses overnight. "If we struggle as a country to enforce controls at our borders, be it land, sea, or air, how much more the other countries? We had issues under the Southern African Customs Union that T-shirts are allegedly produced in Malawi, Eswatini, etc. We know, relatively or not, they are produced in China, but some local supplier within this country just sold a label that says 'Made in Eswatini,'" Parks said. In a Time Release Study (TRS) conducted jointly by Sars and the Eswatini Revenue Service last year, the turnaround time for trucks exporting cargo to Eswatini at the Oshoek/Ngwenya port of entry in Mpumalanga had been reduced from 1 hour 42 minutes to just 10 minutes, and the import of similar cargo has seen the time spent at the border slashed from 42 minutes to 10 minutes. The study helped identify bottlenecks that led to long delays at the border crossing, as plans were afoot to have a one-window experience for truck drivers processing freight. BUSINESS REPORT Visit:
IOL News
4 days ago
- Business
- IOL News
Sars imposes R30 million tax bill on businessman: a caution for directors and shareholders
A recent Tax Court ruling highlights the importance of accurate record-keeping for directors and shareholders, as Sars imposes a staggering R30 million tax bill on a businessman due to undeclared loan accounts. Image: File photo. A recent Tax Court ruling in favour of the South African Revenue Service (Sars), which treated large loan account balances as undeclared income, serves as a warning to directors and shareholders to properly manage these accounts, maintain accurate records, and be prepared to explain the origin of funds when Sars flags loans as unexplained. The case of Taxpayer D v CSARS (IT 35476, 25 February 2025) dealt with the question of whether the taxpayer had satisfactorily explained a large sum reflected as a loan account owing to him in one of his wholly owned companies. The dispute was factual in nature, relating to the source of the funds for the 2014 to 2017 tax years. The case revealed a staggering tax exposure. Sars assessed the taxpayer on undeclared income of R37.1 million, as well as R20 million in undeclared interest income linked to shareholder loan accounts. This resulted in a total assessed amount of R57.1 million. Besides the tax obligation, the Court ruled that Taxpayer D also had to pay interest accrued, an understated penalty, and legal costs, including the cost of two counsel and an expert witness. Taxpayer D is a successful businessman who owns several companies. The structure is always the same, and he is the sole shareholder and director. According to Court papers, he earns income from his companies in the form of salaries, dividend income, and interest on shareholder loan accounts. Judge J. Manoim said in his judgment that the subject matter is the taxpayer's personal affairs, which are a product of how he used and accounted for his loan accounts in one of his companies. The manner in which the taxpayer operated the accounts of his companies gave rise to the case. The taxpayer used these loan accounts to fund other companies in his group. It was noted in the judgment that: 'When he did so, he would earn interest income from the company he lent the money to, which would then be credited to a loan account he had in the company. What added to the complexity was that he also, in his capacity, borrowed from some of his companies to fund another, whereafter he paid interest to his lending company. Generally, he paid a lower interest rate when he borrowed compared to the higher interest rate he received when he lent.' Sars said Taxpayer D gave inconsistent explanations for the cause of the unexplained increases in the balances of the loan accounts. The amounts were not supported by the income declared in Taxpayer D's returns. Key Legal Principle: Burden of Proof Rests with the Taxpayer Referring to these amounts, the judgment reads: 'The amounts are large. It called for an explanation from the taxpayer, but he did not come to give one [in the Tax Court].' The Court reaffirmed that the burden of proof lies squarely with the taxpayer, as set out in section 102(1) of the Tax Administration Act. In this case, not only did the taxpayer fail to discharge the burden of proof, but his failure to testify also suggests that if he did, his testimony would elicit facts unfavourable to his case. Therefore, the Court also ruled that drawing an adverse inference was warranted. The Court further held that it was not enough for Taxpayer D to rely on reconstructed figures or second-hand explanations, such as from his accountant who testified. Sars' expert witness with 40 years' experience discredited the evidence by Taxpayer D's accountant as 'guesswork', and described the reconstructed financial records as methodologically flawed. Without credible, firsthand explanations, Sars' assessments stood. What This Means for Business Owners and Shareholders This case illustrates Sars' readiness to assess both unexplained capital increases and accrued interest on shareholder loan accounts. Inadequate records, multiple accounts, or unclear audit trails can significantly increase tax exposure. Without clear, contemporaneous documentation, Sars may treat inflows as taxable income or impute interest. To mitigate these risks, business owners, directors, and shareholders must ensure their loan accounts are consistently reconciled and reflect legitimate economic activity. Take Proactive Steps Before Sars Flags Your Account Following the Budget Speech on May 21, 2025, Sars announced that the 2025/26 financial year revenue estimate of R1.986 trillion, as outlined by the Minister of Finance, places a responsibility on the agency to implement revenue-raising initiatives. 'By dutifully implementing its compliance programme, Sars is well positioned to collect all revenue due to the fiscus. Sars will specifically accelerate work on collecting all debt, with a specific focus on undisputed debt', Sars said in a statement. This sends a clear message that taxpayers can expect intensified scrutiny from Sars, which aligns with its Project AmaBillions, a special initiative focused on tax debt collection over the next three years. Taxpayer D's case serves as a warning to all. Had he taken the matter seriously from the outset, his liability could have been reduced by at least R7.5 million. Any taxpayer who does not understand their loan accounts or is uncertain about the accuracy of their accounting records should consult a tax attorney to proactively engage with Sars and secure the best possible outcome. * Langton is a tax attorney, and Mornay Bornmann is an attorney: cross-border taxation at Tax Consulting South Africa. PERSONAL FINANCE
