Sars cracks down on bank accounts to combat tax evasion

The SA Revenue Service (Sars), has ramped up efforts to tackle tax evasion by turning its focus to bank accounts.

Sars is closely monitoring financial transactions and leveraging bank data to identify individuals whose wealth doesn’t align with their tax contributions.

In addition, the revenue service is pursuing banks and financial institutions that fail to recognise their role in preventing tax evasion.

This includes listing suspect lenders and financial entities as part of ongoing investigations, conducting audits and, when necessary, freezing assets to prevent capital flight.

Sars recently revealed record-breaking gross collections of R2.303-trillion for the 2024/25 fiscal year, underscoring its increasingly effective tax compliance efforts.

According to Jashwin Baijoo, associate director and head of strategic engagement & compliance at Tax Consulting SA, Sars’ expanded powers are enabling more aggressive tactics in pursuit of unpaid tax debts.

“Sars can instruct a bank to empty its accounts and pay a tax debt due without the account holder’s authorisation,” said Baijoo.

Court rulings have reinforced the authority of Sars in such matters, making it clear noncompliance can have severe consequences.

Sars is also harnessing the power of artificial intelligence (AI) and data analytics to support its enforcement.

Baijoo noted that AI is used to process taxpayer bank statements without prior consent and even gain access to taxpayer data from cryptoasset service providers when requested.

“Aiding Sars’ compliance crusade are the data-driven insights derived from AI use, including processing of taxpayer bank statements without any prior warning or consent,” said Baijoo.

Given Sars’ expanding surveillance capabilities and its use of AI to identify discrepancies, taxpayers are facing more scrutiny than previously. Baijoo warns that noncompliance could lead to significant financial and legal consequences.

“With Sars having access to information, including all financial records, and the right processing automation, the most prudent approach to be taken, for all taxpayers, is to heed Sars’ warning that noncompliance will be both hard and costly,” he said.

Baijoo emphasised it is crucial for taxpayers to remain compliant, particularly in an age when automated systems are playing an increasingly dominant role in financial oversight.

“To protect yourself from financial ruin, and even possible jail time, it remains the best strategy that you always ensure compliance — even though we are in the age of the machines, now is not the time to play Terminator,” he said.

When it comes to avoiding the harsh penalties of tax evasion, Baijoo recommends early engagement with tax and legal advisers.

“Where you find yourself on the wrong side of Sars, there is a first-mover advantage in seeking the appropriate tax and legal advisory, ensuring the necessary steps are taken to protect both yourself and your unblemished record from paying the price for what could be the smallest of mistakes,” he said.

If issues arise, Baijoo encourages taxpayers to engage Sars legally.

“Where things do go wrong, and the data-driven insights detect a ‘risk’, Sars must be engaged legally, and we generally find them utmost agreeable where a correct tax strategy is followed,” he said.

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