SARS Intensifies Trust Scrutiny—Are Your Trustees Prepared?

/in /by

The South African Revenue Service (SARS) has fundamentally changed the compliance landscape for all trusts. The latest revisions to the ITR12T (Trust Income Tax Return) and related legislation signal that SARS is moving toward full transparency, demanding granular detail on trust structures, distributions, and beneficiaries.

Trustees can no longer afford a passive approach; non-compliance is being flagged faster than ever, leading to immediate audits and severe penalties.

  1. New Compliance Cornerstone: The IT3(t) Data Mandate

The IT3(t) (Third-Party Data Return for Trusts) is now the most critical piece of the trust compliance puzzle, moving from an administrative task to a mandatory compliance check integrated directly into the tax return.

  • ITR12T Integration: The Trust Income Tax Return (ITR12T) now includes a mandatory confirmation question: “Did the Trust submit an IT3(t) return?” Failure to confirm submission will halt the filing process and trigger a non-compliance flag.
  • Automated Cross-Validation: SARS uses the IT3(t) data—which reports all amounts vested in beneficiaries (income, capital gains, and capital)—to directly pre-populate beneficiaries’ individual tax returns.
  • The Mismatch Risk: Any discrepancy between the amounts reported by the trust on the IT3(t) and the amounts declared by the beneficiary will be instantly visible to SARS’ automated systems, virtually guaranteeing an audit or investigation.
  1. Full Transparency: The Beneficial Ownership Disclosure

In line with international Financial Action Task Force (FATF) requirements, SARS is aggressively enforcing beneficial ownership (BO) disclosure to combat illicit financial flows.

  • Mandatory Detail: Trustees must provide extensive personal details, including the South African ID number, for every natural person who qualifies as a Beneficial Owner.
  • Broad Definition: A BO includes the Founder/Settlor, all Trustees, and all Identifiable Beneficiaries (even those who have not yet received a benefit).
  • Supporting Documents Required: The ITR12T mandates the upload of documents (such as an organogram or spreadsheet) that clearly depict the BO structure and control hierarchy.
  • Trustee Liability: Non-disclosure of BO information to both SARS and the Master of the High Court can lead to significant financial penalties and potential criminal sanctions for the trustees personally.
  1. Legislative Updates Restricting Tax Planning

Recent legislative changes have further tightened the net, targeting structures that previously offered tax efficiencies.

  1. Restriction on Flow-Through for Non-Residents

The long-standing flow-through principle, where income distributed to a beneficiary retains its nature, is now limited to South African resident beneficiaries only.

  • Impact: Income and capital gains vested in non-resident beneficiaries are now taxed within the trust itself at the highest flat rates (45% for income; 36% effective rate for capital gains).
  • Compliance Need: Trusts with non-resident beneficiaries must ensure they meet all provisional tax obligations and re-evaluate their distribution strategies.
  1. Attribution Rules and Minor Beneficiaries

The Donor Attribution Rules (Section 7 and Paragraph 69) remain a high-risk area.

  • Risk: Income or capital gains stemming from assets donated by a parent to a trust that are vested in their minor child are attributed back to the parent and taxed at the parent’s marginal rate.
  • The Cross-Check: The integration of the IT3(t) makes it simple for SARS to cross-check distributions to minors against the parent’s tax return, instantly highlighting any failures to apply these complex attribution calculations.

Immediate Action for Trustees

The time for a reactive approach is over. Trustees must proactively ensure their trust administration is watertight to avoid triggering a SARS audit.

  1. Verify Beneficial Ownership: Ensure all BO details are current, accurate, and fully documented before filing.
  2. Align IT3(t) and ITR12T: Confirm that the vesting decisions and amounts reported on the IT3(t) are 100% consistent with the ITR12T and the beneficiaries’ expected tax declarations.

Review Distribution Strategy: If the trust has non-resident beneficiaries or distributes to minors, urgently review the strategy to ensure compliance with the new limitations and the strict attribution rules.

URGENT WARNING: The Catastrophic Impact of CIPC FINAL Deregistration

/in /by

A company’s failure to maintain its statutory compliance, primarily the filing of Annual Returns for two or more successive years, triggers an administrative process that leads to the complete and immediate withdrawal of its legal status by the Companies and Intellectual Property Commission (CIPC).

The status of “Final Deregistered” is not merely a formality—it is a catastrophic event that instantly strips the business of its legal identity and triggers severe financial and legal liabilities.

  1. The Immediate Loss of Legal Personality

Final deregistration under the Companies Act (No. 71 of 2008, Section 82(3)) has immediate and devastating legal consequences:

  • Cessation of Existence: The company or close corporation (CC) is removed from the CIPC register and legally ceases to exist as a separate juristic person (CIPC).
  • Invalid Contracts: Any contracts, agreements, or transactions entered into by the company after the final deregistration date may be deemed void (CIPC). This exposes the directors to risk and can lead to financial losses with clients and suppliers.
  • Frozen Banking: Financial institutions (banks) are notified and typically freeze the company’s bank accounts, immediately halting operations and cash flow (CIPC).
  1. Assets are Forfeited to the State (Bona Vacantia)

This is arguably the most severe financial consequence for the business:

  • Forfeiture of Assets: All the company’s assets—including immovable property (land, buildings), bank balances, and intellectual property—are automatically transferred to the State as bona vacantia (ownerless goods) (CIPC).
  • Loss of Creditor Enforcement: While a company’s debt is not extinguished by deregistration, creditors lose the immediate ability to enforce those debts against the now-non-existent entity (CIPC).
  1. Personal Liability for Directors and Members

Deregistration does not end the liability of the individuals who governed the entity.

  • Continuing Liability: The liability of any former director or member for any act or omission that took place before deregistration is unaffected and continues (CIPC).
  • Reckless Trading Risk: Directors who knowingly allowed the company to trade or accrue debt while non-compliant or undergoing deregistration risk being held personally liable for the company’s debts (CIPC). This can also extend to common law actions for reckless or fraudulent trading.
  • Notification Failure: The CIPC sends warnings to the registered contact details of directors/members. Failure to receive these due to outdated contact information is the responsibility of the director, not the Commission (CIPC).

Reinstatement: An Expensive and Uncertain Process

While reinstatement is possible, it is not guaranteed and requires a significant administrative effort.

Reinstatement Requirement Practical Impact
Proof of Economic Value The company must provide sufficient documentary proof (e.g., bank statements covering a period before and after deregistration) that it was in business or had assets at the time of final deregistration (CIPC).
Clearance of Backlog All outstanding Annual Returns, associated fees, penalties, and the latest Beneficial Ownership (BO) declaration must be filed and paid (CIPC).
Process Length & Cost The process is complex, involves a dedicated application (Form CoR 40.5), a non-refundable application fee (R200.00 as of the latest guide), and is time-consuming (CIPC).

 

CRITICAL NOTE: If a company was not in business or held no economic value at the time of final deregistration, CIPC will reject the reinstatement application. The only recourse is to register a new entity (CIPC).

Directors and business owners must check their status on the CIPC register immediately and resolve all Annual Return and Beneficial Ownership arrears to prevent the catastrophic event of final deregistration.

Navigating the New Landscape: VAT on Low-Value Imported Goods in South Africa

/in /by

The South African Revenue Service (SARS) has been steadily reforming its customs import system for e-commerce, and recent changes, particularly concerning Value-Added Tax (VAT) on low-value imported goods, are set to significantly impact businesses across the country. These amendments are driven by SARS’s commitment to fostering fair competition and ensuring legitimate trade within the rapidly growing e-commerce sector.

The Key Change: No More VAT-Free Low-Value Imports

Historically, a concession existed where certain imported goods valued at less than ZAR 500 were exempt from VAT, and a flat rate of 20% was applied in lieu of Customs duties. This effectively created a loophole that favoured foreign e-commerce sellers, allowing them to bring low-value parcels into South Africa without the standard 15% VAT that local businesses are required to charge.

SARS has officially closed this loophole.

  • Interim Implementation (from 1 September 2024): SARS began implementing changes whereby VAT was introduced in addition to the 20% flat rate Customs duty for these low-value consignments. This marked the practical end of the VAT exemption.
  • Formalisation and Reconfiguration (from 1 November 2024): The customs system was further reconfigured to align with the World Customs Organization’s (WCO) Guidelines on Immediate Release.2 This involves categorising goods for duty purposes into distinct categories, ensuring appropriate duties are applied alongside the now-standard 15% import VAT on all goods, regardless of their value.
  • Legislative Finalisation: While SARS has implemented these changes through Customs directives, the formal legislative amendments to the VAT Act to permanently remove the de minimis threshold will be tabled in upcoming tax bills for parliamentary approval, solidifying these changes into law.

In essence, all imported goods, even those of low value, are now subject to the standard 15% import VAT.

How Local Businesses and SMEs Will Be Affected

These changes bring both opportunities and challenges, particularly for South African small and medium-sized enterprises (SMEs) and other local businesses.

For Local Retailers and Manufacturers (Selling Locally Sourced Goods):

This is largely good news for businesses that primarily source and sell goods within South Africa.

  • Level Playing Field: The most significant benefit is the creation of a more equitable competitive environment. Local businesses have long argued that they were unfairly disadvantaged by foreign e-commerce platforms that could offer goods at lower prices because their imports were VAT-exempt. With VAT now uniformly applied to all imports, local businesses can compete on a more level playing field, potentially seeing an increase in local demand.
  • Increased Consumer Confidence in Local Products: As the price differential narrows, consumers may be more inclined to support local businesses, knowing that the price reflects a fairer tax application across the board.

For E-commerce Entrepreneurs and Small Businesses (Importing Goods for Resale):

These businesses will experience the most direct and immediate impact.

  • Increased Landed Costs: The cost of importing goods, particularly those previously benefiting from the ZAR 500 exemption, will increase by the 15% import VAT, in addition to any applicable customs duties and handling fees. This directly impacts your cost of goods sold.
  • Pricing Strategy Adjustments: Businesses will need to review and likely adjust their retail pricing strategies. You will need to decide whether to absorb some of these increased costs, pass them entirely to the consumer, or find a balance. Clear communication with customers about these new costs (e.g., in product listings or checkout) will be crucial.
  • Enhanced Administrative Burden: While SARS aims for a simplified clearance system, managing and reconciling the 15% import VAT on potentially numerous small consignments will add an administrative layer. Businesses need robust financial systems to track these costs accurately for tax purposes and cash flow management.
  • Supply Chain Review: It may be an opportune time for importing SMEs to review their supply chains. Are there local alternatives that are now more competitive? Can bulk imports reduce per-unit costs and administrative overheads, even with the new VAT?
  • Cash Flow Implications: Paying 15% VAT upfront on all imports will impact cash flow. Businesses need to plan for this increased outlay, especially for high-volume imports.

Navigating the New Terrain

These changes underscore the importance of accurate financial planning and robust accounting practices. Businesses, especially SMEs, should:

  • Review your product costing models to accurately account for the new import VAT.
  • Engage with your logistics and customs clearing agents to understand their updated processes and any new fees.
  • Communicate transparently with your customers about any necessary price adjustments.
  • Consult with a financial advisor or chartered accountant to ensure full compliance and to strategically assess the impact on your business’s profitability and cash flow.

SARS’s actions are a clear signal of its intent to modernise the tax system for the digital economy. While challenging for some, these changes ultimately aim to create a more equitable and sustainable trading environment for all businesses in South Africa.

The New Normal for Foreign Tax Credits: Key Section 6quat Changes (South Africa)

/in /by

South African taxpayers with foreign income or investments will benefit from crucial amendments to Section 6quat of the Income Tax Act, which provide greater relief against international double taxation. These changes, primarily focused on the carry-forward of unused credits and the treatment of foreign capital gains tax, are effective from March 1, 2025 (the start of the 2026 year of assessment for individuals).

Part 1: Detail of the Section 6quat Amendments

  1. Introduction of the Foreign Tax Credit Carry-Forward (Up to 6 Years)

This is the most significant change, moving away from the “use-it-or-lose-it” system:

Aspect Pre-March 1, 2025 Post-March 1, 2025
Treatment of Unused FTCs Any foreign tax credit (FTC) that exceeded the South African tax liability for the year was generally lost. Unused FTCs can be carried forward automatically by the South African Revenue Service (SARS).
Carry-Forward Period Not applicable. The unused credit can be carried forward for up to six subsequent years of assessment.
Applicability Affects companies from the 2025 tax year and individuals/trusts from the 2026 tax year (commencing March 1, 2025).

This amendment ensures that taxpayers will be able to fully utilize foreign taxes paid, even if South African taxes on that income are lower or if the income fluctuates between tax years.

  1. Full Utilisation of Credits on Foreign Capital Gains

The legislation has been modified to address the calculation of FTCs on foreign capital gains:

  • The Change: Taxpayers are now permitted to fully utilise foreign tax credits for the taxes paid on capital gains in a foreign jurisdiction.
  • The Benefit: This eliminates the previous restriction where the FTC for capital gains was limited only to the portion of the foreign tax credit attributable to the taxable portion of the gain (i.e., the portion included in South African taxable income).

This means the FTC can be used to the same extent for the taxes paid in South Africa on the same gains, providing fairer double tax relief.

Part 2: Compliance Steps for Taxpayers

The carry-forward mechanism is largely automated by SARS, but taxpayers must ensure correct disclosure and retention of records to benefit fully.

Compliance Step Action Required by Taxpayer Rationale for Compliance
1. Accurate Return Submission Fully and accurately declare all foreign income and the corresponding foreign tax paid in the relevant section of the ITR12 (for individuals) or ITR14 (for companies) tax return. SARS’s system relies on this input to correctly calculate the Section 6quat credit and the six-year carry-forward amount automatically.
2. Documentation Retain verifiable proof of foreign tax paid (e.g., foreign tax assessments, official tax receipts, or tax certificates). In the event of a SARS verification or audit, this documentation is essential to prove the claim and prevent the disallowance of the credit.
3. Assessment Review Carefully review the Notice of Assessment (ITA34) received from SARS. Ensure the correct FTC has been applied and that the unused foreign tax credit balance has been correctly carried forward and reflected on the assessment.
4. Tax Residency Status Verify current tax residency status in South Africa, especially for expatriates. The entire Section 6quat mechanism only applies to South African tax residents taxed on their worldwide income.

Final Note

These amendments, effective from March 1, 2025, significantly improve the South African tax system’s relief for double taxation, particularly for international investors and those with sporadic foreign capital gains. Taxpayers are encouraged to consult a tax professional for assistance with complex international tax matters.

Your Tax Deadlines for October 2025

/in /by

  • 07 October – Monthly Pay-As-You-Earn (PAYE) submissions and payments
  • 20 October – End of Filing Season 2025 for Individual taxpayers
  • 24 October – Value-Added Tax (VAT) manual submissions and payments
  • 30 October – Excise Duty payments
  • 31 October – VAT electronic submissions and payments and CIT Provisional Tax payments.

Adapt or Suffer: How to Keep Your Business Afloat in a Changing Climate

/in /by

“Taking bold action on climate change simply makes good business sense. It’s also the right thing to do for people and the planet.” (Richard Branson)

Climate change impacts the fundamentals of business operations. Rising heat affects productivity, floods and storms damage infrastructure, droughts disrupt supply chains, and new regulations increase compliance costs. Many leaders still believe their sector will be spared, but no industry is truly insulated. Just as one-third of startups fail because they never properly defined their target market, businesses that fail to assess climate risks may find their models undermined by forces beyond their control. The message is clear: failing to future-proof your business, will result in extremely hard times ahead.


Start with the risks you’re facing

The first step is to identify which climate risks could most directly affect your operations.  These can be physical (think floods, wildfires, and extreme temperatures), or transitional, such as regulatory changes and shifts in customer expectations.

According to the latest prediction models, South Africans can expect a hotter, more erratic climate with the country warming at about twice the global average. This means more very hot days that will hurt worker productivity and equipment reliability. On top of this, the country is also experiencing heavier downpours with increased flood damage. These damaging floods, such as those seen KwaZulu-Natal in April 2022 and the Western Cape in September 2023, will result in enormous insurance and economic losses and prolonged business disruption.

Despite the flooding, the country is also not in the clear when it comes to water stress. The 2015–2018 Cape Town “Day Zero” drought was devastating for car wash businesses but a boon for borehole drillers. Day Zero may have been avoided, but there will be more droughts in the future.

All of these issues can lead to stock and agriculture failures, infrastructure collapse and process interruptions. A lack of water, for example, creates cleaning and hygiene issues as well as lower staff productivity. Insurers in SA have been reporting increasing weather losses and rising catastrophe claims, which will continue to feed through to higher premiums and excesses and tougher underwriting in high-risk zones.

You can only build a realistic plan once you understand exactly where your exposures lie.

Build a climate profile for your business

Once you understand the risk categories, create a profile detailing how they intersect with your company. You need to consider your location, your sector, your suppliers and your employees. A warehouse on a floodplain carries different risks from a retail store in a heat-stressed city. Manufacturing firms may depend on inputs that are vulnerable to drought or fire, and employees may struggle in adverse weather conditions. Many exposures sit within the supply chain, where a small disruption upstream can ripple through global markets. For example, higher than usual temperatures may result in crops failing, or greater costs for HVAC and cold logistics services. Have you factored in these costs being passed on to your business?

This profile should be updated regularly, as conditions, regulations, and technologies evolve and more is learnt about the severity of future weather patterns.


Segment your strategy

Not every part of your business will need the same response. While operations may require investments in resilient infrastructure or more efficient energy use, supply chains might need diversification or tighter contracts with suppliers to ensure continuity.

Products and services may need to change as customers shift their preferences toward sustainable options. Segmenting your approach enables you to focus on the areas that matter most.


Use data to drive decisions

Climate planning is most effective when it’s based on evidence rather than assumptions. It is vital that any planning you do is based on the data from climate models, insurance assessments, and financial analyses. Tracking information like rising temperatures, energy costs, and new compliance regulations will turn climate risk from an abstract concern into a measurable factor in your strategy. In South Africa, municipal climate plans are being adjusted to redraw floodplain rules and heat-safety requirements. Is your business going to even be compliant when they come in?


Talk to your stakeholders

Your customers, employees, suppliers, and investors are able to offer different perspectives that could keep you ahead of any climate disasters. Customers can tell you what matters most in their purchasing decisions, employees may note practical changes to streamline daily operations and suppliers can share concerns that could highlight problems you had not foreseen. Talking to all of your stakeholders is more important than it’s ever been.

Climate planning is an ongoing process

Preparing for climate change is not something you can set and forget. It requires regular review and adjustment as risks, regulations, and technologies change. Businesses that take structured action now don’t just reduce their exposure – they’ll also become more attractive to capital investment and build long-term resilience.

Climate change is already reshaping the way companies operate. The question is no longer whether it will affect your business but whether you are ready to respond.

Management Accounts: A Strategic Tool for Business Success

/in /by

“Accounting is the language of business.” (Warren Buffett)

Increasingly, banks and other organisations are requiring businesses to submit up-to-date management accounts when applying for finance. This is because these compact financial reports enable business analysis even when the latest annual financial statements are not yet available.

Management accounts also offer owners and managers timely, accurate and actionable financial insights that facilitate performance evaluation, smart management decisions and informed planning – all of which can transform how your business operates and grows.


What are management accounts?

Management accounts are a set of summarised financial reports. They’re similar to annual financial statements but they aren’t as formal, and they’re produced much more frequently – usually monthly or quarterly.

They’re all about providing relevant financial data for informed business decision-making. As such, there’s no fixed format. Instead, management accounts should summarise and combine the financial reports you need to make smarter decisions.

These financial reports might include some or all of the following.

What can be included in management accounts?
Income Statement (Profit & Loss)
  • Detailed breakdown of income and expenses
  • Measures performance over a specific period
Balance Sheet
  • Provides a snapshot of the financial position (assets, liabilities, and equity) at a specific point in time
Cash Flow Statement
  • Tracks actual cash movements
  • Monitors what funds are available, incoming, and required for outflows
Key Performance Indicators (KPIs)
  • Quick performance assessments
Trend Analysis
  • Comparisons with previous periods and industry standards
Variance Analysis
  • Compares actual figures against budgets
Other
  • Debtors and creditors reports
  • Payroll reports
  • VAT and PAYE reconciliations
  • Departmental reports for individual business unit performance

 

What can management accounts tell you?
Performance
  • Comparisons with previous years and industry standards
  • Results analysed against KPIs
  • Are strategies working?
  • Early signs of negative trends
  • Areas for improvement
Cash Flow
  • Early warnings of cash flow pressures
  • Avoid cash flow problems
Profitability
  • Where is profitability strongest?
  • Where to boost margins or reduce costs
  • New business opportunities
Operational Insights
  • Top-performing products and customers
  • Guide decisions about pricing, resources, and reward strategies
Control
  • Monitor overheads and stock levels
  • Early detection of irregularities / fraud
  • Risk management and governance
  • Accurate, current records reduce audit fees and enable smarter tax planning
Planning & Decision-Making
  • Up-to-date financial reports that support smart strategic decisions

The right set of management accounts can do more than record numbers – it can provide meaningful insights that help your business to perform better, plan ahead, and stay in control.


We can tailor your management accounts 

We tailor management accounts to your company’s exact reporting requirements, turning your financial data into actionable insights that can not only improve operational efficiency but also create a solid foundation for sustainable growth in your company.

Salary Sacrifice: Why Founders Should Always Pay Themselves

/in /by


“Paying yourself isn’t selfish, it’s sustainable. The goal is to strike a balance that supports your personal life without compromising the growth of your company.” (Salim Omar, CPA and serial entrepreneur)

 

Many founders see skipping their own salary as a noble way to fund growth. In reality, underpaying yourself often backfires. Research shows that 82% of small business failures stem from cash flow problems and unpaid founders can mask true costs, distort margins, and create hidden financial pressure – and that’s just the start of it.


What’s the real cost of your time?

When founders refuse to take a salary, they are effectively treating their own time as free. In the scramble to conserve cash, they tell themselves they can wait to be paid until profits improve. But unpaid labour is not free. By not recognising this cost, you skew the economics of your business.

Imagine you hire a manager to take over your duties. Their salary would immediately appear as a line item. By not paying yourself, you are masking a true expense. This can mislead investors, lenders, and even yourself about whether the business model is sustainable and prevent changes that need to be made. Pricing, margins, and growth targets all look healthier than they are, setting you up for shocks later.

This is why savvy investors prefer to see founders compensated fairly. An unpaid or underpaid founder may seem admirable in the short term, but it raises questions about whether they and the company can endure the demands of growth.


Burnout is real

Founders who delay setting a salary usually do so because they are waiting for a day when they feel the business has “earned it.” The problem is that this line keeps moving. There’s always another milestone, another round of investment, or another expense that feels more urgent. Meanwhile the founder is likely eroding personal savings, undermining their career advancement elsewhere and causing stress and sleepless nights in their own home.

A survey by Kruze Consulting of over 200 venture-backed start-ups found that business owners who underpaid themselves for too long often burned out and quit before their companies reached key milestones. By paying yourself out, and minimising the financial risks at home, you can avoid the same fate.

Tax benefits

Not paying yourself a salary isn’t doing the company as many favours as you expect. All expenses put through the company (including salaries) reduce your company’s tax burden, meaning that the benefit you’re providing the company by not taking a salary is significantly smaller than you think.

As a general rule, it’s advised that you take 50% or less of the business’ net profits as compensation and save the rest for reinvestment, but each company is different. As your accountants, we can help you to structure the salary you pay yourself to ensure that the greatest benefit is achieved for all concerned – thereby lessening any guilt you may feel for taking a salary before the business is “ready”.


The effect on morale

One of the more surprising aspects of not paying yourself a salary is the impact it has on staff morale. Salaries are a hot topic in any business, and the founder’s salary is carefully watched by all who work there. Paying too much to the CEO or founder can lead to resentment, with staff feeling that difficulties on the floor are not shared in the board or that the effort at lower levels is not being adequately compensated.

Likewise, founders who take no salary, or a significantly reduced salary, instil distrust and fear among employees who begin to suspect that the company is struggling and likely to go under. This can lead to job-security worries, lower job satisfaction, increases in absenteeism, quiet quitting and higher than normal staff turnover – all of which will impact the business’ bottom line.

Paying yourself is paying your business

Refusing to take a salary may feel like dedication, but over time it will eat away at both you and your company. Underpaying yourself masks the true cost of operations, distorts financial planning models, breaks employee morale and increases the risk of burnout. Setting a realistic salary is not selfish, it is a structural choice that strengthens transparency, stability, and resilience.

Let data guide the choice. Track your revenue, costs, and cash flow. And compare your compensation to industry benchmarks for founders at similar stages.

Businesses survive when their leaders are healthy, focused, and honest about costs. By recognising your worth and paying yourself accordingly, you are not taking from the business, you are ensuring it has a solid foundation on which to grow.

This Halloween, Stay Safe From eFiling Profile Hijackings

/in /by

“Profile hijacking points to pervasive cybercrime with global links.” (Edward Kieswetter, SARS Commissioner)

The Tax Ombud has again warned South Africans about the concerning increase in eFiling profile hijackings, which has spurred the Office of the Tax Ombud (OTO) to launch a survey of taxpayers’ experiences and a systemic investigation into SARS.


What is eFiling profile hijacking? 

eFiling profile hijacking involves cybercriminals gaining unauthorised access to taxpayers’ SARS eFiling accounts. Once inside, they change the security details and banking information, and submit fraudulent tax returns to redirect the refunds into their own accounts.

Methods such as SIM swaps and phishing are commonly employed to get access to taxpayers’ eFiling profiles. Using calls and fraudulent SARS text messages, emails and letters of demand, scammers pose as SARS officials or tax advisors, often pretending to want to assist taxpayers to get their SARS refunds.

Concerns have also been raised about possible internal fraud and insider involvement at SARS and certain banks.


SARS systemic investigation

While SARS acknowledges the rise in eFiling profile hijackings, it emphasises that although individual profiles have been compromised, the SARS system itself has not been breached.

SARS adds that additional security measures have been implemented and that it is collaborating with financial institutions and the OTO to combat the scourge of profile hijacking.


How to safeguard your eFiling profile

SARS has issued the following advice:

  • Avoid sharing your eFiling login details. SARS will never request OTPs, passwords or bank details via calls, emails or text messages.
  • Use strong and unique passwords and update them regularly.
  • Enable two-factor authentication for an additional layer of security.
  • Regularly check your eFiling profile and submitted returns for any unauthorised changes.
  • Verify your bank account on eFiling before a refund is paid, even if there was no change to the banking details.
  • If you suspect your profile has been hijacked, change your login credentials promptly using another device, and report it immediately to SARS and to the SAPS as an identity theft case.