PayPal & Tax

[Positively Negative]

Good Day Forum,

I currently have a Youtube channel partnered and get payed via Paypal.
Now when withdrawing money through FNB , there is a huge list of reasons for withdrawing the money.
I choose option 266 (electronic data and news feeds etc).The money appears in my account after 2-5 days normally.

My question is with regards to when it comes to submitting my tax returns next year.
I'm not making much off it but I'm confused on the process regarding online taxation.

Does anyone have any further details or can share their experiences regarding online money and Tax.
I'd rather follow the safe route and not get flagged or audited at a later stage :erm:

Thank you.

 

[NeonNinja]

I'd stay ignorant...

 

[froot]

I'd stay ignorant...

Yeah, until you get caught, and nailed to the wall for tax evasion. Well SARS won't nail you. Bubba will.

@OP, just declare it under your usual income. There is a field where you can add extra income.

 

[Positively Negative]

Yeah, until you get caught, and nailed to the wall for tax evasion. Well SARS won't nail you. Bubba will.

@OP, just declare it under your usual income. There is a field where you can add extra income.

But I'm a bit paranoid. When you withdraw from PayPal, it clearly states you need to be able to supply documents regarding the reason for withdrawal. SARS won't ever be able to sort of access any of my bank details right?
And more importantly, FNB would never flag it if I started making more money?
I think they get their commission cut, so it's business for them anyway???

When you say extra income...will I need to specify how/where that money is generated from.
I could just then state it as 'Freelance Online video editing' maybe

I'm worried ignorance will burn me one day, that's the reason for my posting.
I also plan to expand quite a bit this year and make a lot more money through PayPal.

 

[MKFrost]

But I'm a bit paranoid. When you withdraw from PayPal, it clearly states you need to be able to supply documents regarding the reason for withdrawal. SARS won't ever be able to sort of access any of my bank details right?
And more importantly, FNB would never flag it if I started making more money?
I think they get their commission cut, so it's business for them anyway???

SARS do not need to access your bank account. Any transaction involving foreign currency and or transfers are reported to the Reserve Bank, no matter what the amount. All your transfers will thus be reported to the Reserve Bank and will be available to SARS to check. Additional to this your bank will also report any deposit made in excess of R10,000 to SARS.

You will be stupid to try and hide your income. There is a paper trail a mile wide of which you are not even aware.

You might get away with it for a year or two but SARS will eventually come knocking and ask you to help them balance your tax return figures with what they have on file from the Reserve Bank etc... And remember, things like this carry penalties. So you will either be charged with tax evasion which is a criminal offence or at the very least you will be nailed with a 200 or 300% penalty added to the tax you owe or what they think you owe.

One other thing, do not fall for the foreign credit card is safe story. SA [SARS] have agreements in place with most countries to share and exchange information. Banks are part of this agreement and they will willingly share your details should it be suspected that a crime has been committed. It is very easy for SARS to run the foreign credit card numbers being used in SA and spot check the names of the owners where such cards are linked to bank accounts.

 

[NarrowBandFtw]

SARS do not need to access your bank account. Any transaction involving foreign currency and or transfers are reported to the Reserve Bank, no matter what the amount. All your transfers will thus be reported to the Reserve Bank and will be available to SARS to check. Additional to this your bank will also report any deposit made in excess of R10,000 to SARS.

withdrawal to a US-based debit card (e.g. Payoneer which does not have to be in your own name ...) and then spending the money directly at an SA point of sale leaves zero paper trail, at least from a SARS perspective ...

 

[MKFrost]

...leaves zero paper trail, at least from a SARS perspective ...

Glad you think so. Start at the very beginning - Which information did you use to get the Payoneer card? Where did they deliver the card i.e. your home address? How did you get funds onto the card i.e. from an account in your name or Paypal account in your name? And what did you spend the funds on i.e. maybe perhaps pay a bill which is tied to you in some way? Do you get notifications from Payoneer to your mobile when receiving and or paying cash? Are you just drawing cash from that the same ATM just around the corner from your house, the ATM where there is proper camera coverage everywhere etc...

You may think you are not leaving a paper trail but believe me it will be there to follow should SARS dig their heels in with a proper audit. The world is far smaller than you think and you will be surprised at how quickly and easily information is shared between authorities when it comes to things like tax evasion etc..

 

[NarrowBandFtw]

Glad you think so. Start at the very beginning - Which information did you use to get the Payoneer card? Where did they deliver the card i.e. your home address? How did you get funds onto the card i.e. from an account in your name or Paypal account in your name? And what did you spend the funds on i.e. maybe perhaps pay a bill which is tied to you in some way? Do you get notifications from Payoneer to your mobile when receiving and or paying cash? Are you just drawing cash from that the same ATM just around the corner from your house, the ATM where there is proper camera coverage everywhere etc...

You may think you are not leaving a paper trail but believe me it will be there to follow should SARS dig their heels in with a proper audit. The world is far smaller than you think and you will be surprised at how quickly and easily information is shared between authorities when it comes to things like tax evasion etc..

let me just clarify, not referring to myself, and i'm not saying that to throw the 'man' off my trail, really have not done this myself, but know someone who has for years and years, so the details:
- Payoneer card in a foreign relative's name, including their address overseas, their mobile etc etc etc
- Paypal account also in said relative's name
- funds flow straight from web income (blog, youtube etc etc) to payoneer in some cases, to paypal in others
- Payoneer card only ever used for retail payments at a point-of-sale, no accounts, no cash withdrawals

and agreed; it is not so hard to connect the dots, but keep in mind this is South Africa, the world's little joke of an economy, frankly most US institutions just don't give a toss to cooperate with SARS, unless it is a really big deal, small time fraud won't get their cooperation; they cannot profit from assisting in any way

mostly i started looking into options to get money the hell OUT of south africa, not into south africa

 

[MKFrost]

but keep in mind this is South Africa, the world's little joke of an economy

True in many ways but the wheel turns. I had a friend with an offshore setup and he got away with that for over 7 years until SARS finally caught up with him just because of one wrong transfer to the wrong account which was picked up. His audit went close on two years as it turned into a full on investigation. The whole thing took just under 4 years and he finally managed to settle with SARS but he ended up paying almost three times what he would have paid in normal taxes.

If SARS pushed ahead they could have wiped him out, which they actually did as he had to sell his house etc.. to get the funds to settle with SARS.

So yes, there are many ways to dodge tax but never think that SARS is incompetent. There is enough people there who understand things and know how they work and where to look.

frankly most US institutions just don't give a toss to cooperate with SARS, unless it is a really big deal, small time fraud won't get their cooperation; they cannot profit from assisting in any way

A very big mistake if you believe this. SA is part of the OECD which involves several agreements especially in regards to sharing of tax information etc.. Additional to this SA also have several tax treaties in place which involves the sharing of information in regards to tax.

So its not a matter of whether they want and or will share information with SA but rather that sharing is actually already taking place on an ongoing basis and has been for years already.

And in regards to the US that don't give a toss, the US is one of the most aggressive when it comes to the enforcement of these agreements and they are all over the other countries in regards to getting information and they are just as willing to share what they have. Did you know that most countries have to report any account opened by a US citizen to the US? Even Switzerland, the country famous for their bank secrecy succumbed to the US and now willingly share information with them.

Just for interest, Payoneer is a US based company and thus subject to US laws and thus to all of the tax legislation etc...

mostly i started looking into options to get money the hell OUT of south africa, not into south africa

Easiest way to get funds out is to never let it come in.

 

[NarrowBandFtw]

Easiest way to get funds out is to never let it come in.

no doubt, but when you legitimately earn all your income in SA and already paid all your taxes all nice and legal-like, it's quite annoying when you one day call it quits and leave the country that getting your own money out is not so easy

also when a foreign friend owes you money, just your typical IOU, similarly annoying that they can't just EFT the damn funds to you, will get stuck due to SARB rules, killing processing time at the very least, or worst case holding the funds indefinitely

here's hoping the likes of PayPal or even bitcoin if it ever grows up someday kills the handbrake to change
i don't mind paying reasonable fees, but inconvenience is unacceptable!

 

[MKFrost]

also when a foreign friend owes you money, just your typical IOU, similarly annoying that they can't just EFT the damn funds to you, will get stuck due to SARB rules, killing processing time at the very least, or worst case holding the funds indefinitely

This should not be a problem, I've had people EFT me over a million without problems. Just got the usual call from the bank asking the purpose/reason for the funds and it was deposited within minutes.

Otherwise, have to agree, our exchange controls are draconian and should have been scrapped years ago.