Have you been living the life on social media and not telling the South African Revenue Service (SARS)? Have you gone on overseas trips to exotic destinations? More so, have you purchased new cars, houses, expensive brand clothes, watches or jewellery? The latest legislative change spans at least 14 government bodies that can conduct lifestyle audits.
This change is coupled with mandatory information sharing across a wide range of state entities, including SARS. These developments ring alarm bells for affluent South Africans with unexplained wealth. They will be reported not only to the tax authority but also to prosecuting authorities.
Statutory powers to conduct lifestyle audits
Among the most notable changes in the draft General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill. Published on 14 January 2026 and public comments were due by 13 February 2026, the bill proposes the granting of statutory power to the Financial Intelligence Centre (FIC) to conduct lifestyle audits. This expansion empowers 14 government bodies to rely on shared intelligence for enforcement actions.
The draft bill defines a lifestyle audit as “an audit to determine if a person’s living standards are consistent with the income from legitimate sources that can be attributed to that person”.
Once unexplained wealth is identified and reported to SARS, downstream risks escalate quickly. These risks include potentially significant additional tax assessments. In addition, they also include understatement penalties of up to 200% of the tax outstanding and criminal prosecution.
The only way to avoid this is to use SARS’ Voluntary Disclosure Programme (VDP). The VDP guarantees waiver of all penalties, except in cases of gross negligence or intentional tax evasion. It also guarantees amnesty from criminal prosecution by the Commissioner of SARS.
Big brother is watching
The FIC is mandated to identify the proceeds of crime and safeguard the country’s financial system. It must also share the information it collects with 14 government bodies, as outlined in the draft Bill.
The other objectives of the centre are to facilitate the administration and enforcement of the laws of the republic by making the information it collects and produces available to:
- an investigating authority;
- the National Prosecuting Authority;
- an intelligence service;
- the South African Revenue Service;
- the Independent Police Investigative Directorate;
- the Intelligence Division of the National Defence Force;
- a Special Investigating Unit;
- the office of the Public Protector;
- an investigative division of a national department;
- a supervisory body;
- the investigative division of the Auditor-General;
- the Border Management Authority; or
- the Public Procurement Office.
This framework means that detecting tax non-compliance will no longer fall within SARS’ remit alone. The tax authority may now rely on 14 government bodies reporting potential non-compliance. On the strength of information received from the FIC, all these organs of state can pursue enforcement actions and trigger SARS scrutiny.
The draft bill makes it clear that the FIC can conduct lifestyle audits on persons prescribed by the Minister. This can occur at the request of an organ of state, public entity, or municipality.
The FIC must reasonably believe that the entity is affected by or has an interest in the information obtained through the audit. With this widening of powers across 14 government bodies, the wolf is at the door for individuals living an extravagant lifestyle that they cannot justify through declared income.
What triggers a lifestyle audit?
Anything from a shiny Ferrari to an anonymous tip-off. A lifestyle audit assesses whether a person’s standard of living is consistent with income from legitimate sources formally declared to SARS. It is not voluntary and is typically intelligence-driven.
The FIC Act requires a person who carries on a business, or an employee, who suspects money laundering, terrorist financing, or an unusual transaction to report it to the FIC. The FIC states that all citizens have a responsibility to report suspicious and unusual transactions and behaviour. This may include a national department, colleagues or neighbours who anonymously report suspicious conduct. Intelligence generated by 14 government bodies can also trigger investigations.
Intelligence comes in many forms. During a discussion on wealth taxes, a SARS official recounted noticing 26 Ferraris parked outside a luxury hotel. The official recorded the registration numbers and compared them to the owners’ tax returns. SARS found that none of the owners had declared annual income exceeding R400,000.00. This raised red flags because the price tags of these vehicles run into the millions.
SARS Commissioner Edward Kieswetter has publicly stated that SARS monitors social media posts where taxpayers boast about expensive vehicles or luxury purchases. These posts may prompt SARS to investigate further.
Once intelligence exists and is shared, the scope for remedial action narrows significantly. When an audit is underway, the state is no longer asking questions in the abstract. It is actively testing explanations against data already in its possession.
Why VDP must come before scrutiny
For taxpayers concerned that SARS scrutiny may be imminent, the VDP, regulated by the Tax Administration Act, No. 28 of 2011 (TAA), remains the most effective tool to regularise past non-compliance. When used correctly and timeously, the VDP can provide relief from understatement penalties and amnesty against criminal prosecution.
However, the VDP is premised on voluntary and complete disclosure before SARS becomes aware of non-compliance. In an environment where 14 government bodies share intelligence, the risk is not only that SARS becomes aware. The risk is that SARS becomes aware indirectly through information generated outside the tax system.
Seen in this light, lifestyle audits can close the door on the VDP entirely. This reality highlights the importance of engaging seasoned tax attorneys when non-disclosure is suspected. Early engagement ensures that VDP relief is secured timeously.
VDP versus enforcement
The VDP allows taxpayers to come forward voluntarily. It allows them to control the narrative, quantify exposure, and resolve matters in a structured and legal manner. This approach enables taxpayers to claim a full waiver of penalties and protection from criminal prosecution.
A lifestyle audit, by contrast, places the taxpayer on the back foot. The taxpayer must respond to questions framed by government organs. The taxpayer may also face parallel criminal, regulatory, and tax consequences.
In conclusion
The expansion of lifestyle audits and enhanced information sharing across government signals a more assertive and coordinated enforcement environment. For taxpayers with historical non-compliance, the real risk is no longer limited to a SARS audit. 
Non-tax intelligence from 14 government bodies can trigger scrutiny from multiple state entities.
Do not assume you will get away with it. In this context, the VDP is more important than ever. The window to act is now, before intelligence gathering occurs, before information is shared, and before formal questions arise.
By seeking early advice and engaging a skilled tax attorney, proactive disclosure to SARS can make the difference between a managed outcome and a reactive defence with far-reaching consequences.
Andre Daniels | Head | Tax Controversy & Dispute Resolution | Tax Consulting SA | mail me |
