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Gordhan boasts R17bn SARS tax bonanza    Article Date :12 Oct 2006 SARS may focus on Estate agents evading tax The taxman had already raised R17bn more taxes in the first six months of the current fiscal year than budgeted, South African Revenue Service (SARS) commissioner Pravin Gordhan said yesterday. This would have a “knock-on effect” on the R501,7bn target for 2007-08, he said. Full details of the revenue overrun would be provided when Finance Minister Trevor Manuel tabled his medium-term budget policy statement in Parliament in two weeks’ time. Gordhan told Parliament’s finance committee during a briefing on the SARS 2005-06 annual report he would announce a revised 2006-07 target from a projected R456,8bn. The revenue overrun means Manuel is also likely to announce a budget surplus instead of the projected 1,5% budget deficit as a percentage of gross domestic product this year. Most of the additional revenue in the period came from the corporate sector and pay-as-you-earn tax, fuelled by buoyant economic growth, Gordhan said. Revenue overruns of billions of rands have become a regular feature, leading to criticism that SARS underestimated its projected revenue. Gordhan again explained that there was no way SARS could anticipate macroeconomic factors such as a higher economic growth rate, higher imports and final household consumption expenditure. SARS initiatives to enforce greater tax compliance also contributed to the higher tax take, Gordhan said. “We have no desire to understate or overstate revenue,” he said, noting that economics was a “rough science”. On enforcement, Gordhan said SARS would be giving special attention to the abuse of trusts by high net worth individuals as a way of avoiding income tax, as well as malpractice by construction companies that did not make proper disclosure of income. In addition, the shortfall in trust tax payments could amount to hundreds of millions of rands , Gordhan said. SARS GM of tax policy Kosie Louw said there had been a “dramatic rise in the number of trusts” used to minimise payments of estate duty and income tax, even though a number of loopholes had already been plugged. A major issue for SARS has been the nonregistration of trusts as currently there is no link between the master of the high court’s office and SARS for automatic registration of a trust as a taxpayer. “There is no proper tracking system for trusts,” a SARS official said. Gordhan said estate agents also engaged in tax evasion by claiming personal expenditure as a business expense and manipulating transactions to minimise their transfer-duty obligations. SARS is looking to make significant investments in the year ahead in modernising its computer technology to move to more electronic processes of tax filing and assessment. “We have reached the ceiling of our current capacity,” he said. Gordhan told the committee that SARS’ “live” or recoverable debt amounted to about R6,8bn of the R66bn on its books. CLICK HERE TO RETURN TO THE MAIN NEWS PAGE