COMING CLEAN WITH THE TAX MAN
What are my options?
How to Avoid Tax Penalties and Prosecution with SARS Voluntary Disclosure Programmes.
Are you worried about the consequences of not filing or paying your taxes correctly? Learn how you can come clean with the SARS and benefit from their Voluntary Disclosure Programmes in this post.
Why You Should File and Pay Your Taxes on Time
Very few business owners we’ve ever met consider the SARS a friend. In fact, given the option, the majority would happily overpay their taxes if it meant that they never heard from the Tax man 😊
However, ignoring or avoiding your tax obligations is not a wise strategy. Not only are you breaking the law, but you are also risking severe penalties and prosecution from the SARS. These could include:
- Fines and interest charges
- Criminal charges and imprisonment
- Seizure of your assets and bank accounts
- Suspension or cancellation of your business license
Therefore, it is in your best interest to file and pay your taxes on time and accurately. This will help you avoid unnecessary trouble and stress, and also demonstrate your compliance and integrity as a business owner.
What to Do If You Have Non-Submissions or Inaccurate Submissions
If you have already made some mistakes or omissions in your tax affairs, don’t panic. There is still a way to rectify your situation and reduce your liability.
Traditionally, those fearing prosecution would submit amended returns showing their full exposure to the SARS and then fall on their mercy or the mercy of the courts to avoid very stiff penalties and or prosecution.
Fortunately, in recent years the SARS has proven itself a friend to business by initially introducing a Voluntary Disclosure Programme and now more recently a Special Voluntary Disclosure Programme.
What are the SARS Voluntary Disclosure Programmes?
The SARS Voluntary Disclosure Programmes are initiatives that allow taxpayers to voluntarily disclose any tax defaults or irregularities that they have committed in the past, and in return, receive relief from penalties and prosecution.
There are two types of Voluntary Disclosure Programmes:
- The Voluntary Disclosure Programme (VDP), which applies to all types of taxes and duties, except customs and excise duties. The VDP covers any tax defaults that occurred before 17 February 2010, or within five years from the date of application.
- The Special Voluntary Disclosure Programme (SVDP), which applies only to offshore income and assets that were not disclosed to the SARS or the Reserve Bank. The SVDP covers any tax defaults that occurred before 1 March 2015, and is only available until 31 August 2024.
Both programmes offer the following benefits to eligible taxpayers:
- 100% relief from administrative penalties (except for late submission penalties)
- 100% relief from understatement penalties
- 100% relief from criminal prosecution
- Partial relief from interest charges (depending on the programme and the circumstances)
What’s the difference between the two:
|South African taxpayers with tax defaults in respect of any tax types administered under the Tax Administration Act, disclosures may include defaults on foreign taxable income.
|South African taxpayers with offshore assets and income.
|1 October 2016 – 31 August 2017
|VDP01 via eFiling
|SSVDP section of the VDP01 form via eFiling for tax defaults and the SVDP01 form for exchange control defaults.
How to Apply for the SARS Voluntary Disclosure Programmes
If you think you qualify for either of the SARS Voluntary Disclosure Programmes, you can apply online through the SARS eFiling system. You will need to fill out an application form and provide supporting documents, such as:
- A statement of assets and liabilities
- A calculation of the tax liability and interest
- A declaration of the source and nature of the income or assets
- An explanation of the reasons for the non-disclosure or inaccurate disclosure
Alternatively, you can also apply through a registered tax practitioner, who can help you with the process and advise you on the best course of action. If you need professional assistance, you can contact us, and we will be happy to help you.
Our experience has shown that just like snowflakes, each taxpayer’s circumstance is unique, therefore do not attempt your application as a DIY project, rather consult a professional.
At SME.TAX we do more than just assist clients tax planning.
We are your “one stop SME shop”, assisting with everything from Accounting, Business Management, BEE, Consulting, Company Registration to Payroll and Mentoring.
For more information, please visit our website www.sme.tax or give us a call on +27 012 021 0829