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SARS requested to investigate donations to President Zuma

Tim Harris, Shadow Minister of Finance
11 December 2012

I have today written to the South African Revenue Service (SARS) Commissioner Mr Oupa Magashula to request that he investigate whether or not President Jacob Zuma and his donors paid the appropriate taxes arising from the funds - allegedly amounting to more than R7 million - transferred to him between 1995 and 2006.
I have also completed a RSN01 form with SARS in which I have reported the president for suspected non-compliance.

The recently published "KPMG draft report" prepared for use in President Zuma's trial reveals numerous of payments allegedly made either directly to President Zuma or to banks to settle his debts.

In terms of the Income Tax Act many of these payments could have been classified as donations. If this is indeed the case, then they may well have been subject to donations tax. According to Section 60(1) of the act, if a donor fails to pay donations tax within a prescribed three month period, both the donor and the donee will be jointly liable to pay the outstanding amount of donations tax. Therefore, if the taxes have not been paid then President Zuma as the donee may be jointly liable for any outstanding tax on the donations he received.
This of course assumes that President Zuma accepted the donations without rendering any services in exchange. If this was not the case, then the transfers could instead form part of the president’s “gross income” and be subject to normal income tax.
The Commissioner may, under section 74C(1) of the act, authorise any person to conduct an inquiry into a taxpayer to ensure compliance . The Commissioner is then obligated to apply to a judge for an order designating a presiding officer before the inquiry is held.
Section 74C(5) explains that the judge may grant the order for the inquiry if he is satisfied that there are reasonable grounds to believe that:
•    there has been non-compliance by any person with his obligations in terms of the ITA;
•    an offence in terms of this Act has been committed by any person;
•    information, documents or things are likely to be revealed which may afford proof of such non-compliance or the committing of such offence; and
•    the inquiry referred to in the application is likely to reveal such information, documents or things.
The DA believes that believes that this matter should be investigated further and that all South Africans, including the President, should be duty bound by the laws of the land.