The South African Revenue Service (SARS) has significantly intensified its focus on high-net-worth individuals as part of a broader initiative to improve tax compliance, transparency, and the integrity of the tax system. A key development in this regard is the introduction of mandatory balance sheet reporting for individuals with substantial wealth holdings.

SARS established the High Wealth Individual Unit (HWIU) in 2021, recognising the need for a dedicated division to monitor and engage with affluent taxpayers who often possess complex financial structures, both locally and offshore. The HWIU forms part of SARS’s broader strategic objective to promote voluntary compliance while addressing aggressive tax planning and potential under-declaration of income.

From the 2023 tax filing season, individuals with assets exceeding a market value of R50 million are now required to submit a high-level balance sheet disclosure as part of their annual income tax returns. This disclosure must include both local and foreign assets, and requires the declaration of specified assets, at both cost and market value.  

This requirement marks a significant shift towards wealth-based reporting, a direct outcome of the recommendations outlined in the March 2018 "Feasibility of a Wealth Tax in South Africa" Report by the Davis Tax Committee. This additional reporting requirement significantly enhances SARS’s ability to assess discrepancies between reported income and actual net wealth.

SARS is also no longer relying solely on manual reviews or voluntary disclosures. The revenue authority has implemented advanced artificial intelligence (AI) and data analytics tools to identify inconsistencies between taxpayers’ reported income and their actual financial activities.

These technologies allow SARS to

• detect sudden increases in asset values or unexplained reductions in liabilities;
• conduct lifestyle audits based on reported vs. observed wealth; and
• cross-reference disclosures with third-party data

Through this digital integration, SARS is rapidly closing the gap between declared and actual taxable income. This places HNWIs, especially those with offshore interests or interlinked trust structures, under greater scrutiny than ever before.

While a wealth tax has been a topic of debate in policy and academic circles, it has not yet been implemented in South Africa, and no legislation has been introduced or tabled for parliamentary review. Nonetheless, the mandatory balance sheet reporting and enhanced oversight by the HWIU signal that SARS is building the infrastructure necessary to support more sophisticated wealth-based analysis. Our team continues to closely monitor all developments in this area, including potential proposals from the National Treasury or new compliance requirements affecting high-net-worth taxpayers.

In closing, high-net-worth individuals are exposed to heightened risk. It therefore remains critical to engage experienced tax advisors who understand both the technical filing requirements and the evolving enforcement landscape. PH Tax and Accounting has the expertise to help you navigate this complex, high-stakes environment.  We provide tailored, proactive guidance to ensure that your income tax return, supporting disclosures, and financial reports are accurate, consistent, and defensible.

Contact us today to discuss how we can assist in safeguarding your compliance and protecting your financial reputation in an era of increasing tax transparency.

Disclaimer: This article is the personal opinion/view of the author(s) and does not necessarily present the views of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever, and no action should be taken on the basis thereof unless its application and accuracy have been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken based on this content without further written confirmation by the author(s).