Sarah Heuer, Communications Director at inSite Connect

According to an article by Malcolm Libera on Businesstech.co.za, there are some stormy times ahead for over 200 000 taxpayers who lied about their taxable income when they requested a withdrawal from their savings pots.

According to SARS Commissioner Edward Kieswetter, “If taxpayers understate their income, they are intentionally involved in evading their tax obligation. A penalty will be imposed on … this unbecoming conduct that borders on criminality. There are real consequences for this behaviour.”

Once SARS has issued a tax directive, it is final and cannot be amended. Basically, when it comes to e-filing season, some of us are in for a shock.

If a savings pot claim has pushed someone into a higher tax bracket, and they lied about their taxable income on the claim request, then the chickens will be coming home to roost.

The alarming part of this is that it could lead to vicious cycle of claiming from the savings pot purely to pay the tax owed to SARS!

An example of how tax works on savings pot claims:

• Bongi has a taxable income of R370 000, which means her annual tax is equal to R59 997 (R42 678 + 26% of the amount above R237 100).

• If Bongi decides to request a savings withdrawal benefit of R30 000, she will be pushed into a higher tax bracket and will be liable for tax of R67 722 (R77 362 + 31% of the amount above R370 500).

• If Bongi understated her taxable income when she claimed, she will have to pay it back when she files her tax return, as well as any penalty imposed by SARS as punishment for the falsification.

Communication around this topic is going to be critical in the months to come. The point needs to be driven home very clearly and forcefully before the new tax year, in order to prevent massive unhappiness in the future.

Unfortunately for some, SARS really has its ducks in a row (to continue our poultry theme). You can run from the taxman, but you can’t hide forever. And for the 213 654 South Africans that SARS has identified, their hiding place has already been discovered.

ENDS