Sars & National Treasury’s 18th annual edition of the Tax Statistics bulletin confirms the effectiveness of the revenue collector’s compliance driven initiatives. Sars celebrates a whopping 16,7% year-on-year compliance collection increase, which it attributes to “enhanced strategies and diligent implementation of compliance measures”.

These targeted strategic initiatives have yielded a rise in revenue collection from R260,5-billion in 2023/24, to R304-billion in the 2024/25 fiscal year.

Whilst a positive report for the country’s cash-constrained infrastructure, what this translates to simply, for taxpayers, is – Sars will double-down on targeted revenue collection, focusing on specific taxpayer segments, with crowd favourites being Crypto traders and High-Net Worth Individuals.

Sars’ weapon of choice – Historic audits, leading to astronomical understatement penalties of up to 200% of the tax liability, being imposed!

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 also 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!

Don’t be Criminalised for Crypto Non-Compliance

Sars are issuing Notices of Audit and Requests for Relevant Material, across the Crypto-verse!  

Those who hold, or have ever held, crypto, should certainly not assume that historical non-declaration means that Sars will not look to tax these profits in future. 

Not only will a review of the historical transgressions be conducted but should the crypto trader under the radar not comply, severe penalties, or even jail-time is immediately on the cards, per section 234 of the Tax Administration Act, 28 of 2011:

Further, please note that failure to provide requested information to Sars may constitute a criminal offence in terms of section 234 of the Tax Administration Act and may attract severe penalties. 

Excerpt from pg.2 of the Sars Request for Information, pertaining to crypto asset transactions

Practically, this means that even though taxpayers are requested to make full disclosures to Sars on local & foreign crypto transactions, this is more for verification, than data gathering purposes.

HWIs: Increased Scrutiny on International Tax Affairs

In the world of tax, High Wealth Individuals (HWIs) are known for accruing their wealth through navigation of complex, multi-layered investment structures, both locally and offshore. Countering these complexities, Sars’ compliance-centric stance confirms that the collection focus on HWIs is intensifying, aided by the use of automation and capitalising on data driven insights to enhance efficiency and accuracy in the detection of tax non-compliance.

Through its modernisation, Sars has significantly bolstered its capabilities to monitor and address the tax affairs of HWIs, casting its collection net as wide as possible and enabling swift “risk detection”.

To mitigate these tax risks, Sars assigned to the wealthy, dedicated relationship managers, who are responsible for keeping a close eye on their wards’ tax affairs.

Through its enhanced surveillance. data-sharing mechanisms, and processing automations, Sars can now detect these offshore assets and ensure they are fully declared. Statistically, the confirmed revenue performance from this segment of society is recorded at R11,76-billion in the last fiscal year. If you think Sars are willing to let than number diminish, you would be sorely mistaken!

This proactive approach not only ensures compliance but also helps in the accurate assessment of tax liabilities, thereby reducing the risk of legal repercussions for the taxpayer.

Wealth Seeking Missiles Launched

As Sars continues to upgrade its compliance programmes, taxpayers in the wrong can expect their non-compliance to be both hard and costly. 

Beginning a compliance initiative with the end in mind, is something Sars is known for, which may very well be the case here; by ensuring there is full disclosure of all interests, be it in South Africa, offshore, or in the Metaverse.

By staying informed and proactive in their compliance efforts, both HWIs and Cryptocurrency traders / investors can navigate the tax landscape with confidence, contributing their fair due to the tax collection pot.

Where taxpayers find themselves in a potentially precarious position of now disclosing previously undeclared interests, including crypto assets, the best practice is to seek the assistance of a tax professional, ensuring the best compliance strategy is followed. 

However, where a taxpayer has already undertaken the disclosure themselves, and a subsequent audit ensues, enlisting seasoned tax attorneys to help navigate the complex nuances of tax legislation will optimise a taxpayer’s compliance, thus preventing potential prosecution and the loss of “luxury” assets.

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