With a debt book of R535.9-billion, Sars is looking for any means to expedite seamless collections! Sars can leverage Artificial Intelligence and data driven insights from 3rd party information, including processing of taxpayer bank statements without any prior warning, or consent. 

This empowers the revenue collector to now fully capitalising on their legislative power to audit taxpayers based on “risk(s) detected”, typically going back 5 years:

Excerpt from a Sars issued Notice of Audit on Personal Income Tax

Imagine having historically filed all your tax returns on time, making good on your dues to Sars, only to wake up to a Notification of Audit and Request for Relevant Material – this has become the new normal for many South African taxpayers, be it individuals, or companies.

Sars’ Fully Loaded Audit Arsenal

Since the start of 2025, we have practically seen a significant spike in Sars Audits, which in most cases result in the Audit being Finalised with Adjustments, due to taxpayers missing the Request for Relevant Material. What this means for you, is an adverse finding being made by Sars, and manifested in upward adjustments on amounts included in “Gross Income”.

The adjustments often stem from an analysis of taxpayer bank accounts, and where a credit transaction is unexplainable, is deemed to form part of income. Additional taxes are then levied on this upward adjustment amount, which the taxpayer is wholly liable for. 

Current technological advancements, and machine learning, now also grants Sars access to taxpayer information from crypto trading / investing platforms, allowing the revenue authority to make a determination on crypto-taxes due.

It is noteworthy that to give effect to these adjustments, Sars must issue Additional Assessments, which in extreme cases of non-compliance, may impose “Understatement Penalties” of up to 200% of the tax due!

AI Insights Spell the End for Tax Non-Compliance

Sars has made significant progress in modernising its systems to detect fraud and enhance compliance, whilst also building its tax collection capacity, and a track-record of in-depth Audits when the any inkling of non-compliance is detected.

These data driven insights inform Sars of all transactional records pertaining to specific taxpayers, and using AI, the human resourcing element is significantly reduced in “risk detection” and subsequent compliance-centric actions. 

This collaborative approach enables Sars to gain access to a comprehensive dataset, facilitating more robust evaluations of taxpayers' financial activities, resulting in risk detection, and subsequent “Notification of Audit and Request for Relevant Material” being issued.

Taxpayers then have a finite time to respond, before Audit Findings, and subsequent Finalisation, are issued. Non-response could very well spell the end of days for the offending taxpayer!

Do Not let a Sars Audit, be Your Apocalypse

Where you find yourself facing a historic audit from Sars, it is imperative to ensure a timeous response, with all correct supporting documentation. We have seen in the market a number of ill-advised taxpayers seeking the correct counsel only after the fact and paying the price for it, such as when those Additional Assessments are issued post-Audit Finalisation. The nail in the coffin is always the Understatement Penalties, capping at a bank-breaking 200% of the capital taxes due!

As a rule of thumb, all correspondence received from Sars should be holistically addressed by a by a strong multi-faceted tax, legal, and financial team – the “A-Team”. In instances of non-compliance with tax laws, legal professional privilege is a must, especially where Sars have suspicion of, or have already detected, “risk(s)”. 

This will not only serve in safeguarding you against potential jail-time but also allow for the correct legal stopper to be put in place preventing Sars from implementing aggressive collection measures. As compliance specialists, enlisting your correct A-Team ensures taxpayers and their astute practitioners will be correctly advised on the most appropriate solution to ensure the burden of proof is fully discharged in any Audit.

Written by Jashwin Baijoo, Associate Director and Head of Strategic Engagement & Compliance at Tax Consulting SA