The Citizen (Gauteng)
Sars’ unit for wealthy
Segment offering more appropriate services for ‘high wealth individuals’. REJUVENATED: IT IS MORE IN LINE WITH INTERNATIONAL BEST PRACTICE
The South African Revenue Service (Sars) has made considerable progress in identifying the country’s high wealth individuals (HWIs). Many of them have already been welcomed into the new HWI club by way of a personal letter signed by Sars Commissioner Edward Kieswetter.
The rejuvenated high wealth individual taxpayer unit is more in line with international best practice, says Elle-Sarah Rossato, tax controversy and dispute resolution leader at PwC.
The SA unit has been in existence for many years, and although not completely dismantled during former commissioner Tom Moyane’s leadership, has certainly been “disarmed’” to a large extent.
It is now being revived, bolstered, and expanded, similarly to the Large Business Centre (LBC), which had also been “disarmed” during the Moyane era.
Sars has used information obtained through the automatic exchange of financial information from other tax jurisdictions (offshore assets estimated at R400 billion), the deeds office (the property people own) and eNatis (the vehicles people own).
It also has access to aircraft registers and information from banks and other financial institutions.
Rossato, chair of the SA Institute of Tax Professionals’ tax administration committee, notes that the “old” unit didn’t always operate in line with similar units in other revenue authorities, or with suggestions by the Organisation for Economic Cooperation and Development (OECD).
The OECD started looking at “enhanced relationships” with wealthy and super wealthy individuals around 2008. It refers to a report that estimated the wealth held by high-net-worth individuals (HNWIs) to be $40.7 trillion in 2008. This was obviously before the financial crisis and the outbreak of the Covid-19 pandemic.
The OECD suggested the segmentation of HNWIs, similar to what a UK bank has done with its clients to determine the appropriate service offerings.
The bank – using 2014 figures – classified someone with investible assets of between R9.8 million and R98.2 million at the current exchange rate as being affluent and someone with investable assets in excess of R393 million as being ultra-rich.
This segmentation has already been replicated by the Sars LBC. It divides corporates into platinum, gold and silver “customers” (or clusters) that are assigned a dedicated relationship manager.
The HWI unit replicates this model. However, it is unclear how the segmentation is done or how a high-net individual is defined since this information has not been shared publicly.
The UK unit has specialist teams, which include a finance team, a rising stars team (people who have rapidly increasing wealth), a business investment tax relief team, an analysis and intelligence unit, and a dispute resolution team.
Many of the international units have between 400 and 600 people operating almost like a mini-Sars, says Rossato.
The Australian Taxation Office has already calculated the net high-wealth income tax gap. The gap ranged between 6.5% and 8.2% during 2012 to 2018.
Although the SA unit aims to offer a dedicated service to individuals with complex structures and transactions, it also wants to close the perceived tax gap.
Cross-border tax specialist Hugo van Zyl says the concentration of skills in the dedicated unit will be beneficial for taxpayers whose affairs are so complex that it is impossible to deal with everything through the eFiling system or call centres.