In terms of the new global standard for the automatic exchange of information between tax authorities, the South African Revenue Service (SARS) will start receiving offshore third party financial data from other tax authorities from 2017.
The Special Voluntary Disclosure Programme (SVDP) gives non-compliant taxpayers the opportunity to voluntarily disclose offshore assets and income.
The initial draft bills were published for public comment earlier this year. Following public comments received and a consultation meeting held with taxpayers and tax advisors in June 2016, the SVDP has been simplified.
Instead of calculating two different amounts (i.e. seed capital and investment returns) to be included in the taxpayer’s taxable income, the calculation will now consist of one amount. This amount equals fifty per cent of the highest value of the aggregate of all assets situated outside South Africa between 1 March 2010 and 28 February 2015 that were derived from undeclared income. This amount will be included in taxable income and will be subject to tax in South Africa.
The value referred to above is the market value determined in the relevant foreign currency translated to South African Rand at the spot rate at the end of the tax period in which the highest value fell.
Undeclared income that originally gave rise to these assets will be exempt from income tax, donations tax and estate duty liabilities arising in the past. Future income will, however, be fully taxed and assets declared will remain liable for donations tax and estate duty in the future.
Taxpayers who disposed of any foreign held assets prior to 1 March 2010 may also apply for relief under the SVDP. Special deeming provisions will apply in this regard.
The SVDP will run at the same time as the permanent Voluntary Disclosure Programme (VDP) of SARS and will be open for applications from 1 October 2016 until 31 March 2017.
Failure to disclose offshore income and assets will have dire consequences, including fines and criminal prosecution.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)