This article from a recent Tax Risk Underwriting Managers Newsletter highlights just how many audits SARS does conduct.
“ACCORDING to a report published in the Business Day of 30 September 2014, the South African Revenue Service (SARS) conducted more than 1.8million tax audits, of which about 20,000 were “high-risk, complex and high-impact” cases.
High-net-worth individuals also received particular attention from SARS, which has identified about 3,000 in the country. Nearly 80 audits were conducted into their affairs, yielding assessments of R349m and recovering debt of R106m. Six cases were referred to the NPA for possible prosecution.
SARS collected R900bn in tax last year, of which R311bn came from personal income tax, R180bn from corporate income tax, R238bn from VAT, and R176bn from customs revenue. Total debt outstanding at year end was R83bn, or 9.2% of total tax revenue, of which R29.5bn was new debt. A total of R15bn was written off during the year.
SARS is concerned about the low level of tax compliance in the construction industry, whose reputation was tarnished by widespread bid-rigging and price fixing uncovered by the Competition Commission. In the 2013-14 fiscal year SARS completed 800 audits of construction firms, which raised R1.76bn in assessments of which R192.6m has been collected.
In a bid to enforce compliance, SARS officials made more than 9,500 telephone calls to nearly 4,200 taxpayers in the industry last year. “This resulted in more than 1,800 cases being finalised and the submission of more than 5,000 outstanding returns,” the authority’s annual report said.
SARS would continue to focus on the construction industry, it said. “SARS will pay particular attention to companies that receive government contracts to ensure they are tax compliant because these firms receive funding that is sourced from taxpayers,” it said.
The compliance of tax practitioners came under SARS’s spotlight following the implementation of the Tax Administration Act, which required that they re-register. The act enables SARS to better monitor and regulate the conduct of tax practitioners.
Former acting commissioner Ivan Pillay noted in his review that more than 99% of the 6.6-million returns received by SARS last year were submitted electronically, either through e-filing or at a SARS branch office. Nearly 94.5% of all personal income tax returns filed were processed within three seconds.