The Panama leaks, last year’s HSBC leaks, and OECD’s “Automatic Exchange of Information initiative” all suggest that South African residents with accounts and investments in foreign tax jurisdictions should ensure that they are fully compliant with all their local and international tax and exchange control obligations.
In any doubt, take advice on the proposed new Special Voluntary Disclosure Programme (SVDP) – remember that if you consult a lawyer you will benefit from attorney-client privilege. According to the media statement, the purpose of the SVDP is to give non-compliant taxpayers an opportunity to voluntarily disclose offshore assets and income.
The SVDP was announced in the Budget Speech and is anticipated to run from 1 October 2016 to 31 March 2017, a 6 month period.
The relief proposed in terms of the SVDP will be that:
- only 50% of the total amount used to fund the acquisition of offshore assets before 1 March 2015, if the applicant failed to comply with a tax Act administered by SARS, will be included in taxable income and subjected to normal tax;
- investment returns on the offshore assets received or accrued from 1 March 2010 onwards will be included in taxable income in full and subjected to normal tax. Investment returns prior to 1 March 2010 will be exempt from normal tax;
- interest on tax debts arising from the disclosure of amounts used to fund the acquisition of offshore assets or investment returns in respect of those offshore assets will commence only from 1 March 2010;
- no understatement penalties will be levied where the SVDP application is successful; and
- SARS will not pursue criminal prosecution for a tax offence where the SVDP application is successful.
Penalty relief and protection from criminal prosecution will only be available if applications are submitted to SARS’ SVDP unit before whatever deadline is finally set – we’ll keep you updated!