Sars to focus on certain areas this tax season

sarsThe South African Revenue Service (Sars) will pay particular attention this season on medical aid claims, retirement fund contributions, income protection policy contributions and taxpayers who submit revised returns for previous years.

This is according to acting Sars commissioner Ivan Pillay.

“We are doing this deliberately. We are telling you up front. We don’t want to catch you out. We’re saying don’t go there,” he said.

The SA Revenue Service (Sars) intends collecting nearly R1trn during the 2014 to 2015 tax season, which began on Tuesday.

Tax revenue was expected to grow by 10.4% to R993.6bn, with R899.8bn collected last year, after refunds, Finance Minister Nhlanhla Nene told reporters in Pretoria.

Nene said Sars’s ability to collect revenue had been one of the cornerstones of South Africa’s 20-year-old democracy as it affected government’s ability to deliver public services.

While revenues were expected to increase, the economy was underperforming.

“The South African economy is continuing to grow at a moderate pace but continues to underperform,” the minister said.

“When the economy slows down, we do experience a slowdown in revenue.”

The five-month strike in the platinum sector that ended last week played a significant role in the moderation of economic growth, with output in the sector declining 24.7% in the first quarter.

“The 0.6% contraction [in growth in the first quarter] was mainly as a result of the mining sector challenges we have been experiencing… It has quite a ripple effect in the economy,” Nene said.

“It indeed had a significant impact on the economy and it is going to take time for the economy to reach its pre-strike performance.”

Personal income tax accounted for 35% of tax collected, followed by value added tax (VAT) at 26%, and corporate income tax at 22%.

Nene said tax compliance was important.

“The issue of tax compliance is quite critical, so closing all these gaps would go a long way in addressing part of the tax gap.”

“Sars also has a legal duty to protect the tax system, and taxpayers themselves, against revenue leakage and any form of fraud.”

Pillay said of the 38 000 tax practitioners, around 11 500 were properly accredited with Sars and their respective boards.

“So all of those who are not accredited may help taxpayers prepare, but they may not file for taxpayers,” he said.