In an era past, Benjamin Franklin (iconic diplomat, scientist, inventor and writer) captured a timeless truth that is still applicable today: “But in this world, nothing can be said to be certain, except death and taxes”.
In writing this, there was no question in my mind that discussing the impending Tax Amnesty deadline, including guidance on your best approach, is a priority. What prompted this topic, is the number of clients we speak to daily who are unaware that they may be on the wrong side of the law.
Recommendation: Consult a tax specialist
Whether you’ve built up your foreign assets from inheritance, working abroad or allowances, the devil is in the detail and a one hour consultancy with a qualified tax adviser is highly recommended. If not using a tax specialist who knows all the nuances inside and out, you may unintentionally adopt the incorrect approach when declaring assets.
The hefty penalties and stress that will result from undisclosed international assets being reported as well as possible criminal prosecution should be enough to justify a consultation. Whilst increased tax revenue is what the Government is after, criminal prosecution is an option open to the authorities and one not to be taken lightly.
What is the Common Reporting Standards (CRS)?
Automatic information sharing or the Common Reporting Standard (CRS) is a legal framework for the annual exchange of financial asset information between tax authorities of various countries. To date, 109 jurisdictions have signed up, with South Africa being one of the early adopters. For these early adopters, financial information has been collected since January 2016 and will be reported in September 2017. Starting September 2018, tax authorities will start receiving information from the secondary adopters. A list of participating countries and scheduled adopters can be viewed here.
What are the options available to investors?
The positive news is that you do have options available to report your foreign assets until 31 August 2017. The clock is therefore ticking, and the information required often takes time to gather. The prior finance minister, Pravin Gordhan, made it clear that the Special Voluntary Disclosure Programme, as detailed below, is the final “amnesty” and that individuals need to be aware of the ramifications if they decide not to disclose their international assets.
There are two routes available for investors with foreign funds. I provide a summary of the options below – a more detailed comparative table clearly indicating the difference between SVDP and VDP is available here. It is critical that you choose the correct route as the difference in penalties could be as high as 20%.
- Special Voluntary Disclosure Programme
This option gives taxpayers a once-off platform to disclose their offshore assets to SARS and SARB. Taxpayers who have undisclosed assets abroad will have a limited window within which to disclose their foreign assets and apply for relief – this period started on 1 October 2016 and closes on 31 August 2017.
- Voluntary Disclosure Programme
This option comprises an ongoing SARS-only disclosure programme.
Be prepared for the final amnesty deadline
Carrick has relationships with some of the top tax practitioners in the field to ensure compliance across relevant jurisdictions. Should you require advice on the appropriate structuring of your investment portfolio or an introduction to a professional tax consultant, please do not hesitate to contact our Director of Investments and Products, Anthony Palmer.
I urge you to please speak to your family, colleagues and friends to whom this may be relevant so that they can take necessary steps to regularise their affairs.
Carrick Chief Executive Officer