01/09/2026
A R1.38 million SARS refund turned into a R3.6 million tax bill.
An interesting Tax Court case with a serious lesson for taxpayers.
A taxpayer who earned only salary income had revised tax returns submitted for the 2020 and 2021 tax years showing farming activities that did not actually exist. The returns included alleged farming assets and losses, as well as altered IRP5 information.
The result? SARS paid approximately R1.38 million in refunds.
SARS later audited the returns. The taxpayer admitted that she was not farming and had not purchased the farming equipment claimed in the returns.
SARS eventually assessed her for approximately R3.62 million, consisting of:
- R1.39 million capital
- R141,171 interest
- R2.09 million understatement penalty (150%)
The taxpayer argued that a SARS official had been involved and that she had shared her eFiling login details while seeking assistance.
The Court was not convinced.
Importantly, the judgment highlighted that taxpayers must protect their SARS eFiling usernames and passwords. The eFiling rules specifically prohibit sharing your access code with anyone including a SARS official.
The Court found that the conduct amounted to intentional tax evasion, upheld the 150% understatement penalty, and dismissed the appeal with costs.
Lessons from this case:
Never share your SARS eFiling password.
Always review what is being submitted on your tax profile.
And if SARS deposits a large refund that you know you were not expecting, don’t spend it, investigate it immediately.
Sometimes that “SARS refund” can become a very expensive refund.
