Business
SARS Tightens the Net: What Employers Need to Fix Before the 2025 Tax Season
As the 2025 tax season approaches, the South African Revenue Service (SARS) is ramping up efforts to enforce stricter compliance among employers—especially when it comes to payroll, contractor classification, fringe benefits, and tax incentives.
SARS has made it clear that this year, employers won’t fly under the radar. With a sharp eye on boosting revenue and plugging budget gaps, the revenue service is using new funding to hire more inspectors, auditors, and analysts. The aim? To close in on tax irregularities, big and small.
Deadline Looming for Annual Declarations
Employers have until 31 May 2025 to submit their Annual Declarations. These submissions are crucial because SARS uses this data to pre-fill tax returns for individual taxpayers. Errors or omissions by employers can have a ripple effect on thousands of employees.
Why SARS Is Turning Up the Heat
The pressure is on for SARS to increase revenue collection. In 2024, it pulled in an additional R81.8 billion in personal income taxes—thanks in part to stronger-than-expected returns from Pay-As-You-Earn (PAYE) and early withdrawals under the new Two-Pot retirement system.
Now, with even more resources at its disposal, SARS is casting a wider net to catch discrepancies. This includes a new enforcement drive dubbed Operation AmaBillions, expected to bring in R70 billion over the next three years.
The Four Risk Areas for Employers
Tax Consulting South Africa warns that SARS will be paying close attention to four often-overlooked areas:
-
Misclassified Contractors:
Workers operating like employees but paid as independent contractors fall outside PAYE rules. SARS is likely to crack down on this loophole. -
Fringe Benefits:
Under-reported benefits like company cars or housing subsidies could trigger audits if not accurately declared. -
Travel and Subsistence Claims:
Claims made without solid proof—like proper logbooks or receipts—are red flags. -
Employment Tax Incentive (ETI) Abuse:
Some businesses over-claim or fabricate eligibility for the ETI. SARS is watching this space closely.
New Hires, New Units, New Tactics
SARS isn’t just flexing its muscles—it’s building them. Around 500 new hires are joining the tax authority this year, with plans to scale up to 1,500. These reinforcements will boost SARS’ ability to investigate non-compliance, especially in high-risk sectors like:
-
Mining and quarrying
-
Construction and manufacturing
-
Transport and storage
-
Agriculture and fishing
-
Clothing and household services
PAYE issues appear across all of these industries, making it a top focus area.
SARS is also doubling down on digital and crypto assets and high-net-worth individuals. These special units are already yielding results, with billions recovered from previously untaxed sectors.
What This Means for Employers
If your company’s payroll isn’t squeaky clean—or if you’ve been lax about documenting travel allowances or mislabeling freelancers—2025 could be a rough ride.
Tax experts recommend tightening internal controls, ensuring proper record-keeping, and getting ahead of any potential errors before SARS comes knocking.
As the taxman gets smarter and better resourced, employers would be wise to follow suit.
{Source: BusinessTech}
Follow Joburg ETC on Facebook, Twitter , TikTok and Instagram
For more News in Johannesburg, visit joburgetc.com
