By Magnus L Heystek, Certified Financial Planner
In the wake of sensational news like the so-called Panama papers and a leak of documents of international bank HSBC that exposed global tax dodgers, governments around the world have agreed to take strong action to reduce international tax evasion through offshore assets. The new global standard on Automatic Exchange of Information (AEOI) will enable governments to recover tax revenue lost to non-compliant taxpayers, and will further strengthen international efforts to increase transparency, cooperation, and accountability among financial institutions and tax administrations. Additionally, AEOI will generate secondary benefits by increasing voluntary disclosures of concealed assets and by encouraging taxpayers to report all relevant information.
The South African government, like the G20 countries and several others, have agreed to this new global standard. The Standard requires financial institutions to report information on accounts held by non-resident individuals and entities (including trusts and foundations) to their tax administration. The tax administration then securely transmits the information to the account holders’ countries of residence on an annual basis.
It is against this background that it was announced in the 2016 South African budget that a six month amnesty period will be available to local taxpayers with offshore assets to regulate their affairs before the AEOI comes into effect in 2017.
The SA Revenue Service has issued a draft guide on special voluntary disclosure programme, which from 1 October 2016 will offer non-compliant taxpayers an amnesty on offshore assets and income until 31 March 2017. The guide says the special voluntary disclosure programme is intended to encourage taxpayers to come forward on a voluntary basis to regularize their tax affairs with SARS and avoid the imposition of understatement and administrative penalties. Relief is available in respect of all taxes administrated by SARSS, but excludes duties charged in terms of Customs and Excise regulations.
SARS has confirmed that any person may apply for voluntary disclosure relief. However, a person that is aware of a pending audit or investigation, or is the subject on a not yet concluded audit or investigation, may not use the scheme.
Individuals and companies may apply. Trusts, may not. However, beneficiaries of trust may apply provided they deem the assets and income of the trust as their own. Taxpayers with pending audits or investigations regarding their offshore assets and taxes will not qualify for relief.
If you are unsure whether you are affected by this, do attend the FREE Brenthurst Wealth seminar ‘UNDECLARED OFFSHORE ASSETS’, hosted in association with Hogan Lovells. It will be presented at 16:00 on 20 October 2016 at the Westin Cape Town, Convention Square, Cape Town. To book click here: http://qkt.io/ntflRS. For more information contact Daleen on 011 799 8100 or send message to email@example.com. Seats are limited.