Analysis of taxpayer data reveals an interesting relationship between tax compliance — or, more often than not, non-compliance — and the involvement of family members.
Mbalenhle Mahlaba
Team Lead: Expatriate Tax
This is based on data compiled by Tax Consulting, South Africa’s largest independent tax practice, which handles upwards of 150 new queries per day from South African taxpayers seeking assistance with all types of South African Revenue Service (SARS) and tax matters. Their in-house technology ensures that the correct tax professional is immediately assigned to each matter. In the modern-day environment, no two matters are exactly the same. This makes the tax profession daunting but also fun for a professional who enjoys an everyday challenge and constant learning mindset.
What Does SARS Know About You?
Tax has become increasingly specialised over the past 20 years. It is no longer realistic to expect a single person to possess expertise across the entirety of the tax landscape. This is mirrored within SARS itself, increasingly characterised by deep specialisation in specific areas ranging from technical in various tax types, technology, compliance, collections, prosecutions, audit, voluntary disclosure etc.
The first steps in handling a tax matter are to assess both the level of complexity, as well as the level of the taxpayer’s compliance. It is this actual deep dive into SARS compliance where Tax Consulting’s SARS Independent Software Vendor (ISV) link is critical as it gives direct access to the taxpayer information as seen by SARS.
Tax ‘Mafia’ of Family and Friends: Everyone Knows Someone Who Can Help
Some taxpayers know they are non-compliant. They realise that it is a question of “when” and not “if” SARS will catch them with the tax authority’s access to 3rd party information and its advanced technology.
By far majority of South African taxpayers know they are fully compliant. However, there is a certain segment where their gut tells them that everything might not be in order or that it would be prudent to get a professional “health check”.
Taxconsulting data shows that across these health checks; one trend stands out: “family and friends” being somewhere involved is the clear top ranking non-compliance indicator –
“My brother is an accountant.”
“My cousin works in tax. He will help.”
“A family friend has been doing my taxes for free.”
“My friend’s sister’s friend’s sister is working at SARS.”
If any of these sounds familiar, the firm’s data suggest that there is a higher likelihood that your gut feeling and lingering concern on tax compliance is well-founded.
No Good Deed Goes Unpunished
As well-intentioned as the offers from friends and family members may be to assist with SARS matters and compliance, tax requires far more than completing forms and submitting documents to SARS. The long-term tax and financial implications must be taken into account.
The reasons for non-compliance vary. This can be as simple as incorrectly navigation SARS e-filing or making a technical error on law that has changed. It could be misunderstanding an area of tax and the requirements, for example getting a South African non-residency certificate under the incorrect category.
There are also more sinister cases, where tax returns are submitted as a “nil return” meaning that the tax return is completed with just zeros. This often allows a SARS statement of account to be issued showing no tax due to SARS or even allow a taxpayer to obtain a tax clearance certificate, demonstrating a job well done. However, your tax residency status ultimately determines what income must be declared to SARS and how your tax returns should be completed.
When it comes to your relationship with SARS, choosing the right expertise from the beginning can make the difference between a smooth process and months of unnecessary delays, additional costs, and complications.
As the old Dutch saying goes –
Met Familie moet je wandelen, niet handelen
