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

- Amanda Visser

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.

 ?? Picture: Shuttersto­ck ?? MONEYED. Sars has used informatio­n obtained through the automatic exchange of financial informatio­n from other tax jurisdicti­ons, the deeds office and eNatis to identify high wealth individual­s.
Picture: Shuttersto­ck MONEYED. Sars has used informatio­n obtained through the automatic exchange of financial informatio­n from other tax jurisdicti­ons, the deeds office and eNatis to identify high wealth individual­s.

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