Malema a ‘serious threat’ says SARS

sarsJulius Malema’s comments about Sars poses a serious threat to the tax-collecting agency’s integrity, it says.

In a statement released by Sars, it said: “On June 27 2013 counsel for [Sars] addressed a letter to Mr Julius Malema and his legal representative, cautioning Mr Malema to refrain from making false public statements about the state of his tax affairs and his engagements with Sars.

“In subsequent weeks, Mr Malema has not only refused to correct his lies, he has in fact repeated such allegations in various news interviews.”

During the Economic Freedom Fighters (EFF) national assembly last week, Malema said Sars must not allow itself to be used to settle political fights. He said his colleague Kenny Kunene and other EFF members had received notices from Sars stating they were under investigation. Sars had an obligation to rise above political divisions to ensure the public could trust it with their finances, he said. Malema said if Sars continued to allow itself to be used, the EFF would fight back.

Sars on Friday said it was because of Malema’s comments that it had decided to invoke section 67(5) of the Tax Administration Act which allowed it to disclose taxpayer information that would otherwise be confidential.

Malema’s history with Sars
In 2010, Sars contacted Malema when he failed to submit his tax returns for a number of years. It took Malema 18 months, after many attempts by Sars, to file his outstanding returns. “Ultimately he failed to regularise his tax affairs,” said Sars. Malema had still not registered the Ratanang Trust for tax purposes. Sars had to register it on his behalf. “Neither of these situations, his personal income tax affairs and that of the trust, was helpful in demonstrating his willingness to comply with his tax obligations,” the agency stated.

“Such situations do not only speak to the failure of Mr Malema to comply with his statutory obligations, but also the fact that it is not fair for Sars to treat one taxpayer different from another.” After eventually receiving the outstanding tax returns it became clear, through an analysis of the information, that Malema submitted inaccurate information to Sars for the tax years 2005 to 2011. The same applied to the information submitted about the trust.

“All indications were that Mr Malema was attempting to restructure his asset holdings without informing Sars.” Because of this Sars launched a financial investigation into his tax affairs. The financial investigation found that Malema had failed to register for tax in 2005, he under-declared and mis-declared income in the years 2005 to 2011 and was assessed for about R16-million. Malema also failed to submit the tax returns for the Ratanang Trust.

The investigation found that Malema, while engaging with Sars, was transferring assets he owned to third parties in a clear attempt to shift assets outside the reach of Sars, it said. Malema had made no attempt to pay any amount towards his tax debt. “Ultimately when Sars reached a conclusion of how much tax Mr Malema owed … and despite him having had, by his own account at least R4-million available at the time, he opted not to pay one cent towards his tax debt,” stated Sars.

Malema accepted that he owed Sars R16-million in tax, but he did not offer to convert any of his assets towards his tax debt and he never asked for any form of payment arrangement. “Mr Malema failed the procedural requirements to qualify for a settlement for tax debt through his own design, and not because ‘somebody decided’ so.

“Mr Malema must, as we all do, face the consequences of his actions. He had ample opportunity to utilise the various mechanisms provided for in law to state his case,” the agency stated.

Sars attached some of Malema’s properties to recoup the R16-million tax debt owed by the controversial leader. In May, his incomplete mansion in Sandton, Johannesburg, was sold on auction for R5.9-million. His farm in Limpopo fetched R2.5-million at an auction in June. Several of his household goods were also auctioned off earlier this year. – Sapa