You have a right to organise your affairs so as to incur the least tax liability.
But there is a fine line between what is legal and illegal in this area with SARS putting aside the three-year prescription period and setting penalties as high as 200%!
In taking tax avoidance measures, SARS will refer to Section 80 A80-L of the Income Tax Act.
But before SARS can attack you in terms of this Section, it must prove the following four things:
1. SARS must prove that it was an arrangement.
2. It must prove that the arrangement results in a tax benefit.
Avoid 200% tax penalty
3. SARS must prove that the only or main purpose of the arrangement is to experience a tax benefit.
4. If the arrangement falls within a business context, then one of the following four conditions must be met:
• Means and manners that are not usually done;
• Rights and obligations not usually created;
• There is no or a lack of commercial substance; or
• Misusing or abusing provisions within the Income Tax Act.
So, there were four things that SARS has to prove before attacking you for tax evasion. Be aware of them and allow this knowledge to enhance your functioning.
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