Can SARS check your bank statement?
Some people believe they can hide information from SARS. However, it is in your best interest to declare all income you received during the year of assessment, as it is highly likely that SARS knows more about your finances than your spouse or family members do.
In some developed countries, a taxpayer’s tax return is linked to their bank account. This way, the taxpayer is obliged to account for everything that happens in their bank account on their tax return. SARS is developing a similar system. SARS now requires certain taxpayers to explain why the revenue declared on their tax return does not match the deposits in their bank accounts. Unsatisfactory answers have led to additional estimated assessments and, in some cases, heavy penalties being imposed.
For example, if a taxpayer declares R1.5 million on their tax return but the deposits in their bank accounts suggest a revenue of R5 million, the taxpayer must explain to SARS why the revenue collector should not raise additional assessments for the “under-declared income.” If you do not respond or do not supply adequate reasons as to why the deposits were not declared, or that they relate to loans and inter-account transfers, or potentially from other non-taxable income, then SARS may raise these assessments.
How Does SARS Know What’s on Your Bank Statements?
When you submit your tax return, SARS may request you to submit your bank statements as part of the supporting documents. Additionally, SARS has had access to taxpayers’ information from third-party data providers such as banks and other financial institutions since 2012.
What Happens if You Do Not Agree with SARS Assessments?
The burden of proof lies with the taxpayer. SARS has dispute mechanisms that can be used to challenge these assessments. These procedures often take time and may require supporting documents to support your claims. But SARS may require the taxpayer to reconcile amounts line by line and to explain each line with evidence. For example, why a deposit stands out, why it was made, and why it was not included in the taxpayer’s income.
What if SARS is Correct but I Cannot Pay Them?
It is important to note that SARS can instruct the taxpayer’s bank to deduct monies from an account and pay it over to SARS. Therefore, it is important for a taxpayer to approach SARS and request a compromise or a repayment plan if they feel they are not in a position to settle the amounts due.
Common Questions:
Does SARS have access to all my bank accounts?
Yes, SARS can access your bank account information through third-party data providers like banks.
Do banks report deposits to SARS?
Banks are required to report certain deposits to SARS, which helps them verify your declared income.
How does SARS verify your bank account?
SARS verifies bank accounts by cross-referencing data from your tax return with information provided by banks.
Who can see my bank account?
Besides you and your bank, SARS can access your bank account details for tax compliance purposes.
Ensure Your Compliance:
Stay proactive and ensure your tax affairs are in order. Contact us today for expert guidance and support to ensure you stay compliant and avoid unnecessary penalties and stress. Let us help you navigate SARS requirements with ease.