[imagesource:here]
Over the past year, countless properties that flourished as Airbnb rentals have turned to long-term renting, with local and international travel grinding to a halt.
If you are still making some nice cash on the side via an Airbnb rental, consider this your warning – SARS is watching, and issued a statement yesterday emphasising the need for taxpayers to declare all rental income.
More from the SARS statement:
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…
We are however, equally determined to make it hard and costly for non-compliant taxpayers 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.
That’s a polite way of saying if you choose not to comply, SARS will come down on you, having stated that there is a high degree of non-compliance in this sector at present.
Those knives are being sharpened:
Property owners who, to date, have not declared rental income are encouraged 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.
Given that SARS needs to fill some serious shortfalls, now is not the time to take risks. If you’re in doubt, consult an expert.
The statement goes on to say that those who don’t play ball could suffer “administrative penalties being imposed in addition to interest, or even criminal action”.
Business Insider SA spoke with Doelie Lessing, a director at law firm Werksmans, who said it won’t be all that hard for SARS to catch people out:
[She] says it may be relatively straightforward for SARS to confirm undeclared income from Airbnb. Verifying who owns a property is one of the easiest assets for SARS to confirm, she says. Properties listed on Airbnb could then be potentially cross referenced to confirm hosts.
If you rent your property out for so much as a single day, you’re legally obliged to report that income to SARS.
In fact, if you let even a single room, you’re supposed to declare that, although you can obviously use expenses related to the letting of the property to reduce the amount you pay taxes on.
Recently, the Sunday Times Business section laid out how this would work with a really simple example of somebody who let their property out for a week:
You then work out the expenses related to the rental:
This would leave a profit of R8 500, which is the amount you will pay tax on when you declare the income and expenses to SARS.
You can also further reduce the profit you’ll pay tax on by using expenses like bond repayments, gardening services, rates and taxes, insurance, security, and more.
In short, nothing is ever as simple as the example I provided above, which is why it’s probably prudent to bring in an accounting firm like Galbraith | Rushby to guide you through the ins and outs.
SARS has stated it is on the warpath, so good luck if you’re going it alone.
[sources:sars&businsidersa&sundaytimes]
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