Tax man eyes luxury home-buyers
Will your lifestyle survive an audit?
Pravin Gordhan in his first budget speech didn't make any changes to the existing tax policies that will directly or dramatically affect the property industry. However, the introduction of "lifestyle audits" may dampen the spirits of those potential property buyers whose tax affairs are not up to scratch.
Even though "lifestyle audits" have been hyped in the media recently, no where in his speech did Pravin Gordhan limit such audits to loud-mouthed politicians and government officials.
Lifestyle audits, a means of matching the lifestyle of taxpayers with their tax return, have been successfully employed by the Internal Revenue Services (IRS) in America for many years and have proven to be an efficient way of identifying those who are "creative" in declaring their taxes.
Currently, when purchasing a property the attorney attending to the transfer of the property has to obtain a tax clearance certificate from SA Revenue Services (SARS) for the agent, the seller and the buyer. Should the tax affairs of any of the parties to the transaction not be up to date, they will have to "pay up" before SARS will allow the transaction to proceed. This opens the door to the effective implementation of "lifestyle audits".
How can you purchase a property of R3 000 000, when you are declaring an income of only R45 000 per month? Even if you obtained a 100% mortgage bond, your income must be between R80 000 to R100 000 to qualify for such a bond. And SARS is not oblivious to this! If your income doesn't match you lifestyle of choice, SARS will assist you in identifying such income, taking their fair share of course.
If reading this gives you palpitations, don't fear. All is not lost yet! Pravin Gordhan has given you a window period of a year as from November 2010 to "come clean". However, if you head remains stuck deep in the sand thereafter, expect to pay a 200% penalty fee.
Suze Orman once said "the more tax you pay, the richer you are getting". In order to obtain true financial freedom and grow your asset base, you need to rid yourself of your guilt shackles. Avoid having you lifestyle questioned by living within your means and "paying to Caesar what is due to Caesar".
Tess Rodrigues heads up property finance specialist Property Factor.
Click here to access Realestateweb's new property valuation tools! For less than R100 you can find out who owns a property, what they paid and whether they have a large mortgage - and what others have been paying in a suburb.
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Comments
If Julius can get away without paying tax for last twoyears i dont have to worry mate. Or do i need some friends in the tax office?
by bright spark on March 08 2010, 08:43
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get my lead, BAHAHA
by The Joker on March 08 2010, 09:17
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The article states that you need a tax clearance certificate in order to register the property in your name. How can Malema's tax affairs not be up to date (according to sunday's papers) and yet he could register houses in his name ?
by Confused on March 08 2010, 09:21
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Many people earning R25000pm (combined) who live in R7Mill houses....they are retired and have no debt and have both inherited some wealth....heard of that??
by RJ on March 08 2010, 10:05
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That is exactly why everyone is so suspicious about Juju's affairs. It appears that he can get around the law using his political influence and connections.
by Anzhu on March 08 2010, 10:12
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... and not to Glorious Leader, and his psychopaths like Julius and Co
OF COURSE, there woill be all sorts of "press on the matter, but NOTHING WILL CHANGE!
They will continue to do JUST AS THEY LIKE!
So, my advise to the . .more
by on March 08 2010, 10:44
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I suspect what Mr Gordhan is saying is that its not for ANC MP's
but for the rest of us.
by lETSTATSI on March 08 2010, 10:53
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My personal audit will reveal:
My income (after tax) is spent on private security company, private schooling, private medical aid, private DSTV, burglar bars everywhere, enormous insurance premiums, absurd council rates to keep useless bloated . .more
by Burtfred on March 08 2010, 11:44
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And what about Moti and his mates with their R10m plus places on clifton (and his new garden on cleveland road!) that were paid for with (dodgy?) cash over the last few years? Will those guys be audited or get off yet again?
by Koos on March 08 2010, 12:59
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To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhors, is tyrannical.
Therefore - only an IDIOT will believe that!
"the more tax you pay, the richer you are getting"
by Money-wise on March 08 2010, 12:59
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my monthly income is R40'000 gross, but i live in a R4 million house that my father bought for me, how will i be audited then?
by fifa2010 on March 08 2010, 13:11
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My motto in life is to dodge as much tax as I can.
There is no way on earth that I will ever hand over my hard earned savings to the likes of Malema, Nathi Mtethwa and their other get rich quick currupt ANC buddies to waste on luxuries cars, . .more
by Catch me if you can on March 08 2010, 17:26
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To fifa2010. Have you not heard of "donations tax"? 20% of R4,000,000 is a lottttt.!!!!.. of money.
by Rocky on March 08 2010, 17:37
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They,ll look at your dad....
by mike on March 08 2010, 18:19
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Well, this only means the rich will start to look "not rich". The greedy lazy regime can do what they want. If it seems that I am going to pay more tax, I will just relax and earn less...but paying more because the parasites need it? Aikona.
by Go and steel some other place Minister on March 08 2010, 19:04
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Lifestyle audits are not a new phenomena. Authorities all over the world use them as part of their general audit procedures. SA is just arriving a little late to the party. If your property was gifted to you, or you inherited it etc, the onus is on you to . .more
by A finance savvy foreigner in SA on March 09 2010, 08:06
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Or Waltsing Matilda....Waltsing Matilda.
I hear that Mauritius is offering incentives for Safns to move their businesses there.
And they wont shoot at you or blame you for stuff that happened 300 years ago or try and dig your eyes out or deny . .more
by Fred on March 09 2010, 09:05
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yes, but at least when you paid Caesar you got a decent road system for your sack of salt.
Oooh look Asterix, lovely Romans....
&#@%!!!
by Asterix on March 10 2010, 08:13
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Eat my Shorts!!
by Bart Simpson on March 10 2010, 08:19
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EFRICA SYNDROME: EDVISE FOR DE WHAAITIES. I JEST WOK HARD ENOUF TO LOOK AFTA MYSELVES IF YO HEV YA OWN BISINESS DIVIDE INCOME EKWALLY AMONGST ALL DA FAMILY MEMBAS AND MANY WIVES AND OUMAS AND OUPA'S END DA CHILDREN EACH KEN EARN R58 000 TEX FREE USE DA . .more
by MAC=MAKATINI on March 10 2010, 23:16
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