Why SARS Creates Anxiety In Honest Taxpayers

 

What Makes SARS So Frightening to Law-Abiding Citizens?

South Africans fear the South African Revenue Service because it's alien, complicated and a mystery to them. SARS doesn't have the ability to simplify information so that anyone who is not in the industry can understand how tax works and the rules and regulations that govern taxes. 

What are the tax laws applicable to businesses in South Africa

We are governed by the Tax Administration Act and The Income Tax Act of 1962 (originally written when those people who are expected to understand and apply it, were in nappies or not even born). 

Then you also get the Value Added Tax Act and the Skills Development Act if you're running a business. 

These acts regularly get amended to make taxes easier for ordinary people, yet South African still struggle to understand taxes. Many are still terrified and stressed just by thinking of the T-word.

Who understands SARS?

The language of SARS is so formal and uptight that it constantly feels as if you need a dictionary to understand the words. But you can copy and paste into Google Gemini AI, and ask, "Can you rewrite this in the most simple language that even a five year old can understand?" Yes, you have to use the words of Denzel Washington from the Philadelphia movie. Only then might you be able to make some sense of what the context and the message actually were. Gemini will simplify it for you, but it will still tell you that you have to see a professional. 

Here is SARS' way of saying you can pay less tax and reduce your paperwork if you know about the tax benefits for your type of business:

"It is also important to note the various options with regard to reducing some of the administrative requirements to make tax compliance easier as well as the different tax incentives and rates that may apply in certain instances."

The only people who speak like that are those who are writing the law or have been doing this for so long that they've lost touch with the real world. Nobody speaks like that. 

Imagine having a braai, or chilling with a glass of wine, and you want to encourage your friend to register for VAT, and you say: "It is compulsory for a person to register for VAT if the value of taxable supplies made or to be made, is in excess of R1 million in any consecutive 12 month period." These are the exact words written on the SARS website.

You need a professional to explain what the heck this means, and you better pray to God that you get the right person to help you. 

To my American readers, a braai is a barbecue on steroids with all kinds of meat, salads, snacks and lots of wine and beer.

How can I communicate with SARS online?

In their defense, SARS has created many platforms to make life easier for us. They offer the SARS Online Query System (SOQS), efiling, an sms messaging service and the Mobiapp, just so you don't have to leave your couch, dining room table or your desk to go and fill up the branches.

Just as you start to feel confident about your progress, you receive a setback: a notification that you must visit a SARS branch in person, if you haven't filed your taxes in over five years. No more couch sitting for you. 

Or you want to submit documents online, only to discover the requirements have changed. And for the life of you, you can't figure out if the documents you've sent are the right ones in the wrong format, or were they just the completely wrong documents.

How do I speak to a SARS agent?

You can call SARS at 0800 00 7277 if you want to speak to an actual person.

But calling to get more information is like throwing a dice, or more like living in Forrest Gump's world: "SARS is like a box of chocolates; you never know what you're going to get." Sometimes you get a brilliant consultant who has all the answers, and are professional and helpful. Other times you get an inept impatient person who is clueless about your question, doesn't listen to a word you're saying and who's just plain rude. One day your call get answered in ten minutes; another day  you'll grow a beard, drive to Cape Town from Pretoria, come back; and still be on hold.

Then there are the branches. You go there on a wing and a prayer, unsure about everything. You've called the helpline; you were lucky enough to get a very helpful consultant who gave you a very comprehensive list of all the documents you're going to need. Only to find at the branch that there was that one document they added between yesterday and today, just after you dropped the phone. And it's exactly the one you don't have. 

Or you have all the documents but no one can help you with your problem. You get sent from pillar to post, which isn't very far because SARS branches are not that big. But it literally feels like the long walk to frustration and more questions. And their advice when they don't know: "Get a bookkeeper."

There are consultants who have been absolutely brilliant at resolving issues; who really go out their way to help you. They make it worthwhile to go to a branch.

But too often I've seen people at a SARS branch not knowing whether to be angry, to laugh, cry or just give up. 

 So, why are South Africans afraid of SARS?

People fear the South African Revenue Service because they don't understand it. They don't know what is expected of them and how to fix the mess they're in. They don't know who to trust with their very personal and business information. People are afraid they might make a mistake and end up paying way more money. At the heart of our fear is messing up and losing our money and everything we've worked so hard for.

We fear what we don't know or understand. And what we don't understand, we hate.

We hate SARS because it's unfamiliar territory for most people.

The normal reaction to what we don't know, is to ignore it, and hope that it would go away. Unfortunately, like most problems we tend to ignore, SARS can also blow up in our faces. That is what many South Africans have discovered to their utter dismay.

But on the other hand, there are countless stories of business owners who've been ripped off by the very person who was supposed to help them. 

We are afraid of the uncertainty that comes when dealing with the South African Revenue Service. We are worried about our non-compliance, as many have not filed taxes for several years.

What does it mean if I am tax compliant?

It means you've registered for tax, submitted all your tax returns and don't owe any money to the revenue services.

South Africans have been notoriously non-compliant for many years. No one bothered us about paying our taxes. We didn't know that we actually had to pay taxes on our extra income; or that we need a bookkeeper when we're running a side hustle. For years we only paid taxes on our salaries. The rest was all ours. It felt so good to know there was a part of our money no one could touch.

Suddenly, after a lifetime of non-compliance, we were expected to toe the tax line. And SARS lacks the capacity to train and educate the citizens of South Africa. 

The information is available and it's free. So, why are so many people not informed about the most basic tax benefits? Why are businesses still paying too much unnecessary taxes, or just ignoring SARS? 

When SARS started using the very laws they've allowed us to ignore for decades, they didn't do enough to educate us. They left that part up to people like me to help prepare documents to be submitted to the taxman.

I realised that we are not wilfully non-compliant, most people want to be on the right side of the law. But where do you go when you have a tax problem? Who do you call when you need answers? Definitely not the ghostbusters, it might've worked if they were tax busters. Yes, you can call a professional, but you need money to pay them, and it's going to be expensive.

But is it realistic of SARS to expect a pensioner with a only a pension as an income to pay a professional to file their taxes? How would my seventy three old mother know how to create and update a SARS efiling profile? 

Where do South Africans go if SARS can't help them with their tax problem and they're broke, indebted and desperate?

If you're unemployed and have to choose between paying someone to do your taxes and having to buy food, you'll definitely buy food. The tax professional might prevent you from being penalised, but she's not going to feed you or your family. When you have to choose between your taxes and your immediate needs, your immediate needs will always win.

I'm not condoning non-compliance; there are people who can afford a bookkeeper, but they don't see the need to pay for that service. They are simply too cheap to understand the value of a good bookkeeper. But what about those who really can't afford to fix their tax issues?

How can SARS help South Africans to be more tax compliant?

SARS should offer more professional help and support to citizens to be able to walk into any branch and be assisted, instead of referring people to a tax practitioner, bookkeeper or accountant. The helpline should have enough people with the rights skills and expertise to help you in just one phone call. 

Instead of threatening business owners, SARS should train them. Instead of adding more administration, they should simplify filing taxes. There should've been continuous awareness programs on radio, in work places, schools and communities to inform as many South Africans as possible about taxes. Putting it in a two hour webinar is not enough.

There is a great need for tax education. It affects almost every part of our lives and the best thing you can do for yourself is to know as much as you can about taxes. This is one thing that is not going away. 

We have to start talking about taxes and try to understand the basics.  If you're not willing to pay to put your affairs in order, you'll pay a much higher price in penalties and interest from SARS. Add stress, worry, fear and frustration to the mix, and you have an idea of how much taxes are ruling our lives. It's that or you have to spend hours to figure it out.

How much does it cost to file my tax returns?

To file personal taxes it will be anything from R750 upwards. For business taxes, it starts from R1 250, depending on the structure of your business. Or you can go to a SARS branch and submit it free of charge.

That's not the problem The difficult part is to prepare your financials to be submitted; to record all your transactions, categorise them and prepare reports that will show you the state of your business. And the payment for this service is a huge bone of contention.

I'm an accountant and it's one of the hardest thing to convince South African business owners that they need an accountant if they want to pay less tax. They just don't understand the difference a good bookkeeper, accountant or tax practitioner can make to their business. Many who can pay, just won't invest in an accountant. The same person who complains about our fees, is the same person who's bragging about getting that big contract and the money they'll be spending. Yet, their finances are in a mess.

It's all about priorities. Taxes are inevitable and unavoidable when you own a business. But you need someone to prepare your books to make it easy to file your tax returns.

The best you can do for yourself is to know as much as you possibly can about your taxes. Watch Youtube videos, read simplified articles where someone actually explain the basic principles of taxes. Speak to professionals.  

In the end, SARS holds you and only you accountable for your taxes. They don't accept any excuses. You have to cough up all the money you owe them, when they show up at your door. And they normally come visit long after the money is gone. See every cent that you make as part of SARS property. They own us. That's why you should get the right professionals in your corner to show how pay less taxes.

Tackle your ignorance one little step at a time. Find answers to issues you're having with your taxes. And as soon as you can, get the right bookkeeper, or accountant to organise your finances so you can relax and breathe better.

If you're facing similar challenges in managing your finances, I'd be happy to assist you. As an accountant, I can provide tailored solutions to your specific needs. Please feel free to contact me for a consultation at profitsandbooks@gmail.com or +2764 049 03038

Disclaimer

The information provided in this blog post is for informational and educational purposes only. It is not intended to be a substitute for professional advice, including financial advice. While all efforts have been made to ensure the accuracy of the information, errors or omissions may occur. Please consult with a qualified professional for advice tailored to your specific circumstances.   The author and publisher of this blog post disclaim all liability for any loss or damage caused, directly or indirectly, by the use of or reliance on any information contained herein.