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Pay close attention to tax matters

18 April 2007 Gareth Stokes

The South African Revenue Service (SARS) is in the business of collecting revenue to fund government expenditure. The departments revenue collection record over the past five years cannot be faulted. SARS has met or exceeded its target in each of the last

In an attempt to maintain this impressive record SARS is focussed on ensuring that all legal and private entities are included in the tax net. SARS continues to improve information gathering and information sharing techniques to ensure that financial transactions that have tax implications are reported and recorded.

Tax evasion has always been illegal, and those who defy tax legislation in the future will have a better chance of being caught and prosecuted than ever before. The message is clear: get your tax affairs in order or prepare to face the consequences.

Time running out for small business

If you have been operating a small business beneath the tax radar there is still hope. You have until 31 May 2007 to apply for the small business tax amnesty. Trevor Manuel declared this amnesty in Treasury's February 2006 budget speech. It presents an opportunity for small businesses that have neglected their tax affairs to comply with the law. As many as 28, 000 small businesses have already applied for the amnesty.

The intention with this scheme is to offer small business owners the opportunity to regularise their business activities without the fines, penalties and interest payments that SARS is able to levy. SARS will benefit in the long-term by ensuring that more small businesses comply with tax legislation. They will also benefit from a wider tax net.

There is no legislation to force businesses to apply for tax amnesty. However, as technology and information sharing improve, it will only be a matter of time before SARS gets around to your business. Voluntary compliance today appears a better alternative than a full scale tax audit at some date in the future.

You can find out more about the small business tax amnesty by calling the Small Business Tax Amnesty customer service line on 0860 121-220

Heavy-handed approach

The advertising campaign for the small business tax amnesty features a business with a 'back in 5-minutes' sign on the door. These words are scratched out and replaced with 'back in 5-years'... The implication - that a prison sentence awaits those who fail to comply with tax legislation.

SARS has also engaged in various joint operations to bolster its profile. An article on Fin24.co.za describes how 500 tax and law enforcement officers took to the streets of Johannesburg earlier this week in what can be described as a 'publicity' stunt to increase small business awareness of tax compliance issues. SARS has been clamping down on the sale of illegally imported goods - particularly where customs duties have been avoided.

SARS takes a no-nonsense approach when it comes to enforcing tax law. They have powers of seizure and can attach assets if they believe monies are outstanding. 

Editor's thoughts:
SARS continues to improve its information gathering systems. They are in a position to obtain and analyse details of almost any financial transaction - and are able to seize assets in lieu of outstanding tax payments. Do you think that SARS has too much power in this regard? Send your comments to
gareth@fanews.co.za

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