Guiding consumers since 2009

SARS R706 milllion debt clampdown

By Staff Writer
Businessman, David King, reached a R706 million payment agreement with the South African Revenue Service (SARS) yesterday (29 August) following his submissions made to SARS.
 
In response to the settlement agreement, King said that when the tax dispute arose years ago, he took a conscious decision not to co-operate with the authorities. 
 
“That was a mistake. I regret not engaging with the State sooner as I have found them to be extremely firm but fair in their dealings with me once I fully engaged with them. I accept the fact that I have been non-compliant in the past and will rectify this,” said King.
 
According to reports, King testified that he falsely stated in his tax returns that neither he nor his children were beneficiaries of a trust when in fact they were beneficiaries of the Caledonia Trust. King, known as the ‘Tax Rebel’ also refused to file tax returns since 2002.
 
The millionaire initially had to pay a R3.208 m or face two years in jail.
He entered into a plea and sentencing agreement with the National Prosecuting Authority after appearing in the Palmridge Regional Court yesterday.
 
Tax evasion in the spotlight
 
Julius Malema, leader of the Economic Freedom Fighter(EFF), was recently also in the news regarding tax evasion after SARS investigations found that he failed to register for tax in 2005.There were also discrepancies in his declared income between 2005 to 2011. As a result, Malema was assessed for R16 million.
 
Marc Sevitz, co-founder of online virtual tax assistant, TaxTim, said there is a loophole in the legislation and some high income individuals, work around it to use assets and liabilities to minimize tax liabilities. Trusts, like those used by King, used to be a popular way some people would hide their money from the taxman.
 
“Some companies would even help people to hide their money from the taxman, but these cases are becoming fewer thanks to a worldwide clampdown on tax evasion. Tax authorities all over the world are communicating with each other making it harder for people to get away with hiding their money in international tax havens,” said Sevitz.
 
What can you do about tax debt?
 
Gene Ravele, SARS Chief Officer for Tax and Customs Enforcement Investigations, said the outcome of King’s case demonstrates that SARS remained approachable to any taxpayer who wants to resolve a tax dispute in a bona fide manner, even when formal processes of litigation are before the courts.
Sevitz said that because SARS has an approachable stance, you should play open cards with them when you are unable to pay your tax debt.
 
“You could come to an agreement with them if you can’t pay by explaining your situation up front. But the longer you wait, the harder it will be to do this. SARS also do not take kindly to situations where a declaration is incorrect due to a lie, rather than a mistake. You can face a penalty of 200% of the amount due plus interest,” said Sevitz.

Recent Articles

Featured What’s the deal with underwriting?

When you apply for a long-term insurance policy, a financial adviser will ask some personal questions about your lifestyle, family history, health, and even ask you to take some medical tests. This process is called underwriting, but is it really necessary?

 

How are you taxed on your retrenchment package?

Unemployment is one of the biggest problems in South Africa. The emergence of the Covid-19 pandemic has exacerbated the situation with a lot of companies retrenching their employees.  When retrenched, you’ll receive a retrenchment package, but do you know how much tax you’re liable for?

Car repossessed – don’t be taken for a ride

When the country is facing an economic downturn, chances are your finances will feel the pinch. This can lead you to make bad financial decisions such as skipping your vehicle payments. But every decision has consequences and if you don’t pay your instalment, the bank will repossess your car. But what can you do when this happens?

 

Why you should consider gap cover

Your medical aid should protect you from incurring large medical bills when you’re sick. But what if your plan doesn’t cover the full cost of your medical expenses? We got in touch with insurance experts to find out whether gap cover is worth having.

Deals

Office furniture at discounted prices at BDK

Price: Available on request
When: Daily
Where: Johannesburg

Da Vincis Happy Hour Special

Price: Available on request
When: Daily
Where: Cape Town

Use your Absa card and get 30% cashback at Dis-chem

Price: Available on request
When: Daily
Where: Nationwide


Latest Guide

Guide to debt rehabilitation solutions