If you think you can get away with cheating on your taxes, think again. Last year the South African Revenue Service (SARS) sent 42 tax offenders to jail for a total of 150 years.
And, as a result of conducting 180 412 tax audits on companies and individuals, SARS netted an additional R6.3 billion in back taxes, penalties and interest.
Of this R6.3 billion, R1.49 billion came from individuals.
But SARS believes it is only scratching the surface of an untapped mine of revenue. In papers tabled in Parliament, SARS estimates it is still losing about R30 billion a year in unpaid taxes.
The effectiveness of SARS's campaign against tax-dodgers is reflected in the number of registered individual taxpayers increasing by 400 000 to 3.3 million between 2000 and 2001.
The chances of evading tax are fast diminishing. SARS is increasing its staff complement and improving its computer systems, while cross-checks are showing up discrepancies in taxpayer returns.
In his Budget speech last week, Finance Minister Trevor Manuel announced that, unless proved otherwise, SARS will assume that foreign investments are generating income. Taxpayers who do not adequately explain the returns on foreign investments will pay tax on the income at an assumed rate of 10.5 percent.
You now have to explain on your tax return form not only what foreign investments you have, but how they are invested.
Franz Tomasek, the assistant general manager of legislation for SARS, says a reason for the new measure is that many investors are not properly completing their tax returns showing returns on foreign investments.
With the introduction of residence-based tax two years ago, all income, whether generated inside or outside South Africa - even if the money was invested outside South Africa illegally - is subject to tax.
Taxpayers must not use the 10.5 percent assumed rate of income on foreign investments as an excuse not to declare returns that are higher. SARS will carry out checks to establish what returns have been achieved, Tomasek says.
SARS wants to know the full details of your foreign investments, even if the money has been spent and lost or used to pay for an expensive lunch at the Savoy in London.
Another reason for SARS's interest in foreign investments is that South Africans have sent more than R80 billion offshore illegally, particularly under the previous government. SARS is targeting these illegal funds as a major area of tax evasion.
In the documents SARS submitted to Parliament, it says the R30 billion shortfall in tax collection is a result of a number of factors, including:
- Taxpayers not being aware of their obligations;
- Taxpayers choosing to "aggressively" plan their tax affairs while purportedly adhering to the letter of the law; and
- Taxpayers simply flouting their obligations and breaking the law.
SARS says it would prefer defaulting taxpayers to voluntarily meet their tax obligations. Those who do so, will find a helpful and sympathetic reception.
However, if errant taxpayers do not come forward, the criminal investigation department of SARS is more than prepared to send offenders to jail.
At the same time, SARS says that people who pay their due can expect initiatives from SARS that will improve the level of service.
It intends to introduce dedicated complaints offices around the country that will be independent of the branch offices of SARS.
See also The Revenue Service's client charter