Categories: Crypto NewsNews

SARS to use Social Media to track non-compliant Crypto Investors

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Staff Writer
  • There has been renewed interest in the topic of lifestyle audits and how SARS uses third-party data.
  • Tax experts have warned that taxpayers must declare any significant transactions, including those with cryptocurrency, in order to protect themselves.
  • Traders who brag about their crypto profits on social media platforms, he warns, may find themselves in legal trouble if SARS notices their posts.
  • According to Lobban, non-compliance is still a problem in the crypto asset industry among South Africans.

There has been renewed interest in the topic of lifestyle audits and how SARS uses third-party data. Tax experts have warned that taxpayers must declare any significant transactions, including those with cryptocurrency, in order to protect themselves.

JGL Forensic Services CEO Jacques van Wyk said that the arrival of crypto assets has complicated the forensic investigation process since it challenges tax jurisdictions in a recent panel discussion at SAIT’s Tax Indaba.

Van Wyk is in favor of crypto taxes, but he also thinks that people ignore SARS’s warnings. The SARS director asked the agency to make use of its data and set the appropriate precedents to encourage individuals who are defiantly refusing to comply to rethink their stance.

According to tax consulting business Tax Consulting SA, SARS has access to a wealth of third-party data and can see everything from your new yacht to your credit card transactions and international investments.

According to the corporation, other countries can acquire access to an individual’s offshore transactions through mutual information-sharing agreements.

“However, the crypto-asset analysis goes beyond third-party data analysis. The digital information around crypto is layered, complex, and requires many human resources to examine and rework. SARS is aware of the demand and the subsequent workforce shortage to cull through all the data.”

While it’s tempting to brag about your new sports vehicle or crypto winnings on social media while you still owe money to SARS, it’s not a good idea, according to the firm.

For those crypto millionaires who took advantage of the recent global crypto boom, the report warns, “you may want to rethink your hiding spot.”

We can tell that something is wrong with someone’s finances by looking at how much they spend in relation to how much they earn. If there are any disparities, it is the taxpayer’s responsibility to provide an explanation.

According to Mark Kingon, the former acting SARS commissioner, the revenue collector has been actively recruiting forensic auditors and veterans who can help train the younger specialists.

Kingon stated that increasing and expanding the use of data is a key goal of SARS.

SARS will use its comprehensive knowledge management system to investigate and enforce non-compliance where simplifying procedures with data, analytics, and artificial intelligence fails to encourage compliance.

Tax expert Thomas Lobban said that local investors are often resistant to voluntary compliance when it comes to crypto-asset taxation.

Traders who brag about their crypto profits on social media platforms, he warns, may find themselves in legal trouble if SARS notices their posts.  According to Lobban, non-compliance is still a problem in the crypto asset industry among South Africans.

They believe that SARS has no right to tax them on their gains because of a misunderstanding of tax laws that apply.

As a result of this, it’s easy to see why SARS would start enforcing compliance.” In cases where a taxpayer is not able to prove the source of their income used to fund their lifestyles, SARS is forced to dig deeper.”

According to SAIT CEO Keith Engel, taxpayers who believe they are playing a game with SARS by not paying their taxes for as long as possible are a source of concern.

“Whatever your profits, you are legally obligated to report them. If you don’t report them, it is tax evasion,” Engel said.

“SARS is committed to getting third-party data from the more prominent crypto trading platforms. While SARS is getting this done, people think they can continue to get away with it, but they will get caught two or three years down the road.

“If those individuals didn’t report the income, SARS can go back forever. When they get you, they will want the tax, plus interest and penalties. Then you’re really in trouble.”

If anomalies are discovered as a result of a lifestyle audit, the implications could be severe for you and SARS. Disclosing your earnings and, if required, seeking relief under the Voluntary Disclosure Programme are prudent if you feel you are not entirely compliant (VDP).

If SARS decides to audit your lifestyle, the VDP window is no longer an option – even after being notified of a possible audit, said Tax Consulting SA.

Staff Writer

Published by
Staff Writer