EP24: The New Rules of Tax: AI, Audits, and Staying Ahead of SARS

In this Rev Room episode, Francois sits down with BizRev’s Financial Director and tax specialist, Wayne Turner, to unpack everything you need to know about the 2025 tax season and what SARS’ new AI-driven systems mean for business owners. From stricter verification processes to the rise of automated audits, Wayne explains how the game has changed and why your old “shoebox of slips” won’t cut it anymore.

Whether you’re managing multiple entities, trusts, or simply trying to stay compliant without drowning in admin, this conversation reveals the new tax realities  and the smart systems you can use to stay ahead.

It’s practical, clear, and an essential listen for any entrepreneur who wants to move from reactive tax panic to proactive financial confidence.

3 Key Takeaways

1. SARS is using AI — and it’s watching in real time - Verification letters and income discrepancies are now triggered by automated systems, not manual reviews.
2. Manual record keeping is officially obsolete - Using accounting software like Xero isn’t a luxury anymore — it’s your compliance lifeline.
3. Proactive beats reactive, every time - Staying ahead of submission deadlines and documentation means less risk, fewer penalties, and more peace of mind.

👉 Visit www.bizrev.co.za to learn more about our coaching, consulting, and full-service business support solutions.

📊 Want to see where your business really stands today? Take our free Biz Clarity Score™ — a 3-minute diagnostic to uncover gaps in financial visibility, tax strategy, advisory support, and business resilience. Get instant feedback and actionable next steps.

[Take Clarity Score Quiz Here]

💼 Have a business challenge, need strategic mentorship, or want to be featured on an upcoming episode of The Rev Room? Reach out directly via our site—we’d love to hear from you.

Let’s build better, together.

Transcript

welcome to the Rev room
today we're gonna talk about all things tax
all things that we've learnt
or Wayne and the tax team have learnt
with regards to this new tax season that
we're almost through welcome Wayne
thank you Francois it's good to be here excellent
so Wayne what has happened um
in this tax season and what's well
let's refresh quickly on the tax season as well
so we went into the tax season
um the first deadline
which was the 20th of October
and that was for taxpayers who are non
provisional taxpayers has come and gone
so that's now we're now into the uh
the remainder of the entities
so
the next deadline that we need to meet is January 19th
and that's when the provisional taxpayers
have to submit their tax returns
and also the trusts
and then finally on the 28th of February uh
the companies uh have to submit their tax returns
but the aim is really to try and finish in in
in the course of November
and finish all our 2025 returns
and really be um
up and ready to actually start the new uh
calendar here
so when we can
we talking about submitting in those deadlines
when we talk about the deadlines and submitting
then you don't have to wait for the deadline
before you can submit no
absolutely not
and it's actually better to do it as soon as possible
but obviously when you have a
a very large clientele
you need to spread it out and make sure you can
meet the deadlines comfortably
and that's what we're doing
I mean where we are with our companies now
we basically had about 90% done
the trusts are just about done
and we've got about
30 provisional taxpayer to submit their return
so we're well on track
and we're ready to start the New Year
well on track
but we've also had a lot of learnings you know
so up to now there's been some learnings
and there's been some changes
from a source perspective
which I would like to take into account um okay
let's hear it go yeah
so if you look at the source situation
so for the first time already
I mean source has always been proactive in asking
for documentation
but they've already up their game now
in terms of what they're asking
and they've been a little bit more vigilant and
and I think they can see the technology
coming into their questions
and what they're asking um
some of the changes we've seen this year
in the past really you would get a verification letter
and the IRS
would ask you for various supporting documentation
and you would submit that documentation
within the prescribed 21 days
what SARS also do now is that they actually
they do more than one verification letter
so they would typically ask okay
they wanna see the medical records and the the
the copies of the invoices
the prescriptions the proof of payments
you send that off and all goes well
and then suddenly out of the blue
another verification letter comes through
and this is on a a different matter
which was not raised in the first instance
in this cases we've had where uh
incomes have actually decreased over the year
they want reasons for the decrease in income
so then you have to submit a
a second verification or supporting documentation
to support that verification
so they really are being very
very they're looking
they're scrutinizing the returns
a lot more vigilantly than they had in the past
um so
are you saying that there's a domino effect
with regards to when you
a sasques ask for one item or one verification
they could continuously ask for a number
subsequent to the first one
absolutely absolutely
and you're seeing this a lot
you're seeing this a lot in
in this particularly
particularly in this 2025 tax season
which we never saw before
wow which is interesting
yes so
it shows that SARS is actually digging
deeper and deeper into the returns um
we have had a lot of cases where um
we've had reductions in income and
and in most cases legit reductions in income
but they're still queried and that's what I
I got a little bit angry about
because SA should be picking that up
so we would have cases where a client has a company
they receive a salary and then in the 2024 tax year
we put them on the payroll say middle of the year
so therefore they had income from the business
which was not subject to PAYE for six months
and they paid PAYE the second six months
then in the 2025 year obviously
they're now on the payroll system
and they're on the payroll system for 12 months
savers are still querying
why did their business income uh reduce
but effectively it didn't really reduce
but if you take the two income streams together
it actually went up 15%
but you have to prove that to SAS
do you think it's AI that's using that
they're using pure it's purely AI okay
it's really it's purely AI because those returns
those verifications are coming through thick and fast
and very quickly one of the other things that we found
for the first time this year
is that sources have always queried um
income coming into your bank account
typically post your return um
this year we've had a few instances
where we submitted the return
same day we've got the verification letter
and there's a verification from Sauls asking we
have in evidence of other income in your account
please advise why this was not
included in your tax return
so this is
this is not someone scrutinizing those returns
because it's coming in a couple of hours after
submission so now sources are actually
querying and looking at your bank statements
prior to the submission and and
and that's a big change
so now they've been proactive in querying that income
whereas before it was probably 6
12 months later when after you submitted
now they created on the same day
we have evidence of uh money coming into your account
please explain
wow so what does this mean for the taxpayer
well I think it means the taxpayers
have to finally accept that SARS
is now you know
they are now a very very strong organisation
they're querying documentation
they're querying they have the tools
they are they are um
spending a huge amount of money on artificial
intelligence on third party data
they are they have the tools to get it and secondly
they are bringing in highly
highly educated personnel to
to manage certain areas of source
they they no longer an organisation
that has a bunch of clerks
reviewing the documentation
they are highly capable people now at source
and the taxpayer needs to be needs to be um
put into their tax return
the all their income and also all the deductions
you know and
and I think that's gonna be a challenge going forward
because the taxpayer
on average especially the
not so much the companies
but typically the sole proprietor or the sole business
does not keep records you know
they we
we always say to them
please make sure you must keep your records etcetera
keep the proof of payments they
they promised to do so but it never happens
you know you come the new tax year and then they
they scratching to find information
and that's how we trying to
we trying to if if you have a commission income
or you have a travel allowance
or you're running a separate business
no longer can you run a manual system
it doesn't work
you need to put in a basic accounting system
that gives you bank fees that you can upload
your supporting documentation on a daily basis
or when you walk out of the shop
or the business where you buy it
upload that information uh
and put it straight onto your uh
accounting package and it's there
you know typically
people lose documentation
or they keep the documentation in their cubbyhole
in the car and when they retrieve it 12 months later
well
it's thousands of blank pieces of paper because the
the petrol slips are faded
all the slips are faded you can't read them anymore
you put it on the cloud it's there for
for eternity
so what would you say to someone who says that it's
that's a bit expensive to actually
to pay for the software or the technology you know
the thing is I always say to to all my clients
it's it's far better to pay for technology
than to pay for someone to sort out
the documentation on a
on a uh
manual system you end up paying a lot more you know
your subscriptions
now are less than 1,000 rand a month
for a for a really good uh
accounting system we use zero accounting
cause it gives us the opportunity to do the bank fees
to do the bank recs to upload the documentation
but including zero
there's lots of accounting packages out there
that you can use at affordable prices
the cost of doing this manual process
uh just doesn't work anymore
I had a client come in the other day
with a checkers bag full of documentation
and I said to her
it's gonna take me weeks to sort this out
and it's gonna cost you tens of thousands of rands
to sort out all this documentation
and I said you know
if you're on a counting system
you can put it in and she said no
she'll do it but it's a pain you know
I like in it to I remember when I was growing up
and you could join the gym
and when you join the gym
there were annual packages
and they cost like 40% of the annual
if you pay if you went on an annual package
but they knew what they were doing
they knew that people would come for
for two months and then give up
it's the same with the documentation
they promised to keep the documentation
and after two months
they give up because something happens in their lives
they're busy and suddenly six months have passed
and they haven't tracked
they haven't tracked their log sheet
they haven't kept their documentation be smart
you have smart technology now you have smartphones
it's not difficult
it's a mindset that people must change and
and keep their documentation
so if you don't keep your documentation
and you get ordered
and you need to supply documentation
and you don't have it is that disallowed
is that expense disallowed
what sources do you know
so I know in the past people used to say no
we just
we print all our bank statements and we write on the
on the bank statement what it was for and
and SARS generally accepts that
that's no longer the case
SARS is actually getting very
very um particular
and they're asking for the supporting documentation
plus the proof of payment
so if you don't have the documentation
SARS is going to disallow those expenses
as simple as that as simple as that
and
and you actually have no grounds to stand up to argue
okay I mean
if you look at the recent article that's
come out in the business press
and that SARS is going after the diesel
the diesel rebates and and rarely
they are asking for all the supporting documentation
which the companies or individuals are unable to uh
provide
and sources are going after one after the other
to disallow those diesel rebates
which is worth billions
so so the advice is to keep everything on record
keep using the technology at
at at hand and be prepared
be prepared you know
it's not gonna get any easier
Saudi's building capability
they're going to ask more and more'cause
there's money for them there
and then it's easy for them to reject it
and the taxpayer
doesn't have a leg to stand on'cause he can't provide
that supporting documentation
once it's out there it's gone yeah
it's done
excellent
so what about the period of prescription and submitting
when would you
when can you submit your tax return when you
I mean when you get audited
when maybe you should okay
so when we look at the
so when we look at the prescription period
um for supporting documentation
or for source to do a review of your income tax return
so the prescription period is typically 3 to five years
but source has got five years
to actually request supporting documentation from you
now the the prescription date
starts from the day you submit your tax return
so that's critical to advise
so if you're submitting your 25
tax return on the 20th of October
it's 2025 they've got till 20th of October
or basically 19th of October 2030 to
to request supporting documentation
where there's any fraud or
or uh mystery presentation to SA's
there's no prescription period uh
so they can go back as far as they like
we've recently had cases where people are coming in
and SA's have queried a return from 2,007 um
so that brings me down to say well look
they're going back 18 years and I say well
did you submit a return in 2,007
no we didn't so I say well
if you didn't submit a return
then prescription hasn't started
so because you haven't submitted a return yet
so I always say to the people that you know say no
but they they have some outstanding returns
savers are not querying it
I say they are not querying it today
but it doesn't stop them creating it tomorrow
so it's better to get your returns up to date
so you and then then you know
in comfortable in five years time
source can't come back to you
but if you don't submit those returns
and whether they 2,018 2,019
2,020 source can come back and
and query those returns at any time in the future
it's not worth the risk
so the rule is be prepared um
don't take sauce for granted
and ensure that you are compliant annually absolutely
it's the only way you don't have actually any choice
and then just other thing
are we gonna talk about some
maybe a recent case we saw
yes let's do that
so
there was a case published quite recently in the press
actually it was last week we saw a case come through
um and I'm just gonna read a little bit here
because I just want to make sure I get it right
so source a score of this is the published on 20
fourth of october
and as SARS has scored a victory in court
in Bolivia's aggressive push to pursue taxpayers
who are trying to skirt or evade their tax obligations
in this case
SAZ applied the General Anti Avoidance Rule
Gwar to a taxpayer
who had been channeling their remuneration
through foreign entities to avoid paying taxes
the court agreed with SAZ
finding that the sole main purpose of the structure
set up for the taxpayer was to obtain a tax benefit
and that but for the arrangement
substantial income tax would have been paid
in this case
the payment that had to be paid was 46 million rand
so basically what the outcome
the findings of the court
what they finally said was
arrangements taken primarily for tax reasons
when technically compliant on how firmly in
in Sarah's radar put simply
where tax drives the transaction
rather than follows it the arrangement is at risk
I'm gonna repeat that
where tax drives the transaction rather than follows
the arrangement is at risk
so tax always follow the business
structure of the business or any arrangement
tax doesn't drive it and you
you are then coming into anti avoidance measures
and SA is gonna come after you
a very important ruling absolutely yeah
thank you for listening to The Grey Room
if you uh have found this useful
and you would like to make any comment
drop any comment like and subscribe and
and quite importantly share
share this with someone who might find it useful
or insightful um
who might get benefit out of uh
the great advan
advice and tips that Wayne has shared with us yeah
and if there's anyone else that needs any information
any other tax matters share with us and
and we can arrange a podcast to cover
that subject matter as well