SARS has set today (12 August) as the voluntary disclosure deadline for South Africans that are implicated by information leaked to the media in the HSBC tax evasion scandal.“Tax dodgers must run towards the second chance Voluntary Disclosure Programme offer,” says Ettiene Retief, chairperson of the National Tax and SARS Stakeholders Committees at the South African Institute of Professional Accountants (SAIPA).
“Anybody implicated by the leaked HSBC information can make use of the Voluntary Disclosure Programme before the deadline to regularise their position with SARS, and avoid understatement penalties, and even prosecution,” says Retief. “The alternative is to face a SARS audit process with, potentially, a very unpleasant outcome.”
Provided full disclosure is made, any individual or company making use of the Voluntary Disclosure Programme will avoid penalties of up to 200%. The tax would, however, still be payable.
“Hiding information is less effective as tax authorities have ever greater access to global information through a growing web of tax treaties and information leaks,” says Retief. “The HSBC leak demonstrates the powerful dynamics at the heart of today’s connected world.”
“One of the biggest changes in the Tax Administration Act of 2011 is the broadening scope of information that SARS can request,” explains Retief. “Before 2011 SARS had to request specific information relating to a particular taxpayer.”
Since the promulgation of the Tax Administration Act, with greater international information sharing agreements, and automatic third party data being submitted to SARS, it has become very difficult for taxpayer’s to hide income and gains. In South Africa, SARS has the authority to request information or documentation about a taxpayer from any third party, such as the bank, financial advisor, or even your accountant.
Retief also warns taxpayers against to entrusting their financial affairs entirely to a third party without retaining a measure of hands-on involvement. “Not knowing how others managed your finances does not absolve you from personal consequences.”