The South African Revenue Service (SARS) has advised property owners that all forms of rental income must be declared in their income tax returns.
In a statement on Thursday, SARS said property owners, whose properties are located in South Africa and who host fee-paying guests, must declare the rental income they receive.
This is the same principle that applies to any person who has rental income from letting out their property as a homeowner, placing them under the same obligation to declare such rental income to SARS.
A property owner is also required to register as a VAT vendor with the accompanying obligations, if the short-term rental income exceeds R1 million in a 12-month period.
“SARS is working hard to provide clarity and certainty for taxpayers to enable them to meet their obligations effortlessly. We also strive to make it easy for taxpayers who are willing to comply. Our approach has always been that every taxpayer should pay their fair share,” said the revenue service.
In addition, SARS is equally determined to make it hard and costly for non-compliant taxpayers who are not willing to meet their obligations.
“We are working hard to improve system capabilities in order to detect those taxpayers who do not comply by using data to identify risk. Early evidence has highlighted the need to focus on improving compliance in this sector of property owners who derive income from fee-paying guests.”
SARS has also advised property owners who, to date, have not declared rental income, to regularise their affairs with immediate effect.
“Affected taxpayers may choose to use Voluntary Disclosure Programme (VDP), which offers more favourable terms. Failure to regularise your affairs may place taxpayers at risk and should they be selected by SARS for an audit, the more stringent, normal processes will apply.”
For taxpayers, the benefit of using the VDP is that it offers more favourable terms for an assessment in terms of the penalty amount.
“Taxpayers are reminded that failure to comply with their tax obligations may result in administrative penalties being imposed in addition to interest, or even criminal action being taken against them,” SARS said.
The VDP unit at SARS can be accessed directly at VDP@sars.gov.za.