South African taxpayers are heading into the new tax year with a clearer picture of what to expect - and the message is unmistakable: stricter enforcement, deeper data‑driven scrutiny and limited tax relief.

A year of intensified enforcement

Industry professionals report that in the 2025/2026 financial year, SARS significantly escalated its enforcement framework, and this momentum is expected to continue. SARS is placing increased attention on foreign employment income, offshore structures, complex trusts and inter‑company arrangements, all of which are now firmly on its radar thanks to expanded third‑party reporting and global data‑sharing networks. 

One recurring theme across expert commentary is the shift toward data‑driven audits which now occur far faster and more frequently. Because SARS receives data from banks, employers and international tax authorities, mismatches between lifestyle and declared income are more easily detected than ever before.

Limited relief expected in the budget

While the nation awaits the upcoming Budget Speech, significant rate cuts or bracket adjustments are unlikely. Government continues to face substantial fiscal constraints and experts warn that any inflationary bracket relief - if offered at all - will be modest at best.

This expectation echoes earlier warnings about potential tax pressure due to a persistent revenue shortfall identified in medium‑term projections. Although some commentators suggested that increased PAYE or fuel levy hikes might appear on the table, others argued that such moves could worsen consumer hardship and would be politically risky.  

Stricter administrative and compliance measures

Beyond audits, SARS has also tightened several administrative processes, including those relating to provisional tax submissions and understatement penalties. With fewer grace periods and more automated rejection systems, even minor errors in filings can lead to costly consequences. Experts note that SARS’s systems now detect discrepancies with remarkable speed, meaning that taxpayers - particularly provisional taxpayers - must prepare more diligently than in previous years.

More visibility into your financial footprint

Several recent analyses have highlighted that SARS’s visibility into taxpayers’ financial activities is now broader than at any time in its history. With enhanced data‑matching capabilities, SARS can cross‑reference bank records, investment information, employment income and offshore asset data from participating jurisdictions. This widened footprint makes it increasingly difficult for taxpayers to overlook or omit financial information - intentionally or otherwise.

Taxpayers with complex or high‑net‑worth profiles including business owners, individuals with offshore interests and those earning foreign income should prepare for closer scrutiny.

Automation and faster assessments

SARS’s automated assessment system is also set to become even more active in 2026. These systems can detect reporting inconsistencies far earlier in the filing cycle and the turnaround on audit flags will be quicker than ever. While automation reduces turnaround times for compliant taxpayers, it also significantly increases the risk of assessments being auto‑adjusted or flagged when documentation is incomplete or inaccurate.

Tax planning becomes non‑negotiable

With enforcement tightening and room for error shrinking, tax specialists agree that proactive tax planning is now essential. This includes early preparation for filing season, ensuring the accuracy and completeness of all third‑party documents and maintaining transparent documentation for income deductions, offshore assets and trust activities.

While some analysts have expressed concern about possible tax hikes in the broader economic environment fuelled by previous warnings from the Finance Ministry that South Africa faces a substantial revenue shortfall - others argue that SARS is more likely to increase revenue through compliance measures and closing loopholes, rather than adjusting tax rates upward.

The silver lining: Tax saving opportunities still exist

Despite the stricter environment, South Africans can still legally reduce their tax burden through careful structuring, allowable deductions, retirement contributions and accurate record‑keeping. All tax professionals agree – a tighter compliance environment makes early organisation more important than ever.

The clear message we are receiving is that SARS is focusing on compliance, not significant new taxes or changes to legislation. For households and businesses alike, the best strategy for 2026 is simple: stay organised, stay transparent and stay ahead.

Please note that the above is for information purposes only and does not constitute tax/financial advice. As everyone’s personal circumstances vary, we recommend they seek advice on the matter. While every effort is made to ensure accuracy, Nexia SAB&T does not accept responsibility for any inaccuracies or errors contained herein.

Article prepared by: Stefan Diederiks CA(SA)

Registered Tax Practitioner

 

For any queries or further information, please contact:

•         Mansoor Salee - Director

M: (+27) 82 454 4786| E: mansoor@nexia-sabt.co.za

•         Yousuf Hassen - Director

M: (+27) 82 333 3376 | E: yhassen@nexia-sabt.co.za