SARS is in the process of setting up processes to deal with HNWIs and the DTC has been asked for their input in this regard. Whilst the bulk of the report deals with the how and the why, we would like to detail some key points of interest.

Definition of HNWIs and why they are important to SARS

The World Wealth Report defines HNWIs as individuals with net assets exceeding US$1,000,000. According to SARS the total HNWIs on the SARS HNWI register is 37 299. To determine what would be considered to be HNWIs for tax purposes in South Africa, SARS has defined the term in more detail:

  • Lower affluent individuals –high income earners who earn more than R3 million per annum. There are no net asset criteria. Generally salaried employees and represent  54%  (20 303) of the HNWI register
  • Affluent individuals – Earn between R5 million and R7 million pa or have net assets worth more than R16 million. Represent 27% (10 217) of the HNWI register
  • HNWI – Income exceeds R7 million pa or they have net assets worth more than R40 million. They represent 18% (6 545) of the HNWI register.
  • Bulleted List PropertiesUltra HNWI – Have net assets exceeding R75 million. No income criteria. Less than 1% (234) on the HNWI register.

Adopting the 80:20 principle concentrating resources on identifying individuals in this category, and ensuring they are paying the right amount of tax, will undoubtedly bear fruit for tax collections. As indicated, SARS has recognised this and, in its compliance programme, launched in 2012, which included seven priority areas for compliance improvement, the first item on the list was
“Wealthy South Africans and their Trusts”.