The South African Revenue Service (SARS) has noted with concern the views expressed in the press relating to the taxation of rewards payable by the South African Police Services (SAPS) to informants. These reports created the impression that the imposition of tax on such rewards is a new form of taxation. This is not the case.
An amount paid by the SAPS (or by any other institution) to an informant as a reward for information supplied by the informant is, and has always been, subject to income tax in the hands of the informant.
However, what is of mutual concern to the SAPS and SARS is the possibility that an informant's personal details may become public as a result of the normal administrative procedures prescribed by the Income Tax Act, and that this may jeopardise the use of informants by the SAPS. To address the administrative difficulty relating to the collection of tax on these amounts SARS has made appropriate collection arrangements with the SAPS, which will ensure that the identity of an informant remains anonymous.
It follows that the identity of informants will under no circumstances become known as a result of the taxable status of rewards of this nature. SAPS would like to reiterate the fact that the taxability of rewards was never under dispute.