Tax deadline – The SVDP programme, SARS, SARB and other possible costly acronyms
By Wouter Fourie
CERTIFIED FINANCIAL PLANNER©
Financial Planner of the year 2015/16
You know that a tax deadline is looming, when everyone around the Sunday lunch table is talking about it. But there is another tax deadline that people with undeclared foreign funds should be considering – the Special Voluntary Disclosure Programme (SVDP) deadline.
The SVDP is a programme that was introduced by the Minister of Finance during this year’s budget speech. It was formally introduced by the South African Revenue Service (SARS) on 1 October this year and it is expected to run until 31 March 2017.
Under this programme, South Africans with undeclared foreign assets and income are encouraged to make SARS aware of these funds. SARS will levy penalties and fees on these funds, which may be unwelcome, but it certainly beats the massive penalties of up to 200% of the value of the assets. Also, possible criminal prosecution awaits those that do not declare these funds and income.
The new round of SVDP was introduced by SARS and the SA Reserve Bank (SARB) as an olive branch to people who have not declared off shore income and who have subsequently not paid taxes on these funds. One may be tempted to continue to hide these funds, but with electronic and legal advancement on the sharing of tax information between different countries, SARS and the SARB argues that it is only a matter of time before tax evaders will be caught, fined and penalised.
While you may be tempted to simply fill in the SVDP form available from your local SARS office or on eFiling and declare your funds to SARS, you will be better served to contact Ascor® for advice on the best way of declaring your funds and paying fines and penalties.
For instance, if you declare any foreign funds, but you keep them off shore, you will pay 10% of the current value of these funds in penalties. If you repatriate these funds to South Africa, these fines reduce to 5%, but you will be charged another 2% of the fund value if you pay for these funds from money other than the funds that you are bringing back to South Africa.
Another rule from SARS state that only 50% of the total amount used to fund any off-shore assets will be subject to tax and any investment income from these foreign funds will only be subject to tax after 1 March 2010, while funds generated before this date will be exempt.
With many rules and complexities in declaring and repatriating funds under the SVDP, you may be well advised to contact Ascor® Independent Wealth Managers to structure the best possible way of managing your foreign wealth.