Luxury Goods Audit: SARS shifts its focus to buyers of luxury goods

SARS has started its investigation into the purchase of luxury goods as a part of the crackdown on individuals suspected of purposefully hiding sources of income from the authorities.

During a conference held by The South African Institute of Taxation, Chief Revenue Officer Johnstone Makhubu stated that the authorities are looking into individuals who are purchasing luxury apparel with no clear means of paying for the items. The project aims to give tax authorities a broader view of individuals who are outside of its purview but that they would like to include in the net.

This investigation is part of SARS’ efforts to reinforce tax compliance and rebuild under the guidance of commissioner, Edward Kieswetter. SARS was among institutions that were systematically depleted during former President Jacob Zuma’s rule to protect himself and his associates from scrutiny.

The tax office established a wealth unit last year to concentrate on high-net-worth individuals with complex financial arrangements. During the fiscal year that ended in March, SARS also completed 25 lifestyle audits, which revealed around R474 million worth of assessments that it is currently attempting to collect.

In order to increase compliance and ensure that efforts like lifestyle audits get “hardwired” into its operations, SARS is progressively moving toward merging traditional audit and accounting competencies with data engineering and analytics.

It is said that various data exchanges have been set up to assist with the investigation of financial emigration, a process used by South Africans based overseas to pause their local tax residency and SARS has to date identified about 300 000 transactions exposed for a possible investigation.