“I missed the SVDP deadline … What do I do now?”

“I missed the SVDP deadline … What do I do now?”

• 18 September 2017
• Individuals Tax
• Louis Botha and others

Important:

This article is based on tax law for the tax year ending 28 February 2019.

Authors: Louis Botha, Candice Gibson and Nandipha Mzizi (CDH)

On 31 August 2017, the window period for the Special Voluntary Disclosure Programme (SVDP) came to an end. The SVDP consisted of a tax component (Tax SVDP) and an exchange control component (Excon SVDP). Applicants had to submit separate applications in order to declare their offshore assets and income, and to regularise their affairs from a tax and exchange control (Excon) perspective. From September 2017, the South African Revenue Service (SARS) will start receiving taxpayer information from other countries in terms of the Common Reporting Standard. 

CRS is aimed at curbing tax evasion on a global basis, and South Africa has adopted the wide approach regarding the CRS in its domestic legal framework. South African financial institutions must report on all foreign account holders and foreign controlling persons of entity account holders, irrespective of whether South Africa has an international tax agreement with their jurisdiction of residence or whether the jurisdiction is currently a CRS participating jurisdiction. 

If persons did not declare their offshore assets and income in terms of the Tax SVDP and the Excon SVDP to regularise their tax and Excon affairs, there are still other options at their disposal. So what are the options?

Tax Voluntary Disclosure Programme

From a tax perspective, persons can make use of the regular Voluntary Disclosure Programme (Tax VDP) to declare their offshore income to SARS. The provisions pertaining to the Tax VDP are contained in Chapter 16 Part B of the Tax Administration Act, No 28 of 2011 (TAA). The Tax VDP has been available for a number of years and can be utilised to remedy any “default”, which is defined in s225 of the TAA as “the submission of inaccurate or incomplete information to SARS, or the failure to submit information or the adoption of a ‘tax position’, where such submission, non-submission or adoption resulted in an understatement”. In turn, an “understatement” is defined in s221 of the TAA as “any prejudice to SARS or the fiscus as a result of: 

·         a default in rendering a return;

·         an omission from a return;

·         an incorrect statement in a return;

·         if no return is required, the failure to pay the correct amount of ‘tax’; or

·         an ‘impermissible avoidance arrangement’.”

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This article first appeared on cliffedekkerhofmeyr.com.

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