You have submitted your annual tax return and sigh a sigh of relieve as you sit back and plan how you will be spending your SARS refund.
BUT WAIT! WHAT?! You have been selected for a verification or audit!
Being selected for a verification or audit is more common than you might think:
The number of verifications / audits conducted during the 2012/2013 tax season rose by 42% compared to the previous year.
In 2012/2013, 15% of ALL taxpayers were selected for a verification / audit so, we can only what the stats look like today!
Read the article below for more details regarding a verification / audit, what to expect from the process and what supporting documents you should have readily available, if required.
What is verification?
A verification is a face-value verification of the information declared by the taxpayer in a return. This involves a comparison of this information against the financial and accounting records and/or other supporting documents to ensure that the return is a fair and accurate representation of the taxpayer’s tax position.
Once you have submitted your return, your return could be selected for verification.
Who can be selected for verification?
Any taxpayer can be selected by SARS for verification, depending on your risk profile, for the purpose of proper administration of tax.
What can I expect during the verification?
If you are selected for a verification, SARS will issue a letter requesting the specific supporting documents required. SARS allows 21 business days to submit the required supporting documentation.
If you have a refund due, the refund will not be paid out while the verification is in progress.
Once you have submitted all the relevant supporting documentation, the verification should be finalised within 30 to 60 business days.
What is an audit?
An audit is an examination of the financial and accounting records and/or the supporting documents of the taxpayer to determine whether the taxpayer has correctly declared his/her tax position to SARS. Where the taxpayer has not made a declaration or filed a return, it is an investigation regarding whether the taxpayer’s actions complies with the provisions of the relevant tax legislation.
Who can be selected for audit?
Any taxpayer can be selected by SARS for verification, depending on your risk profile, for the purpose of proper administration of tax. Taxpayers may also be selected for audit on a random or cyclical basis.
What should I expect if I am referred for an audit?
If you are subject to verification and the verification process has been completed, your tax affairs could still be referred for audit as part of the SARS compliance process. This does not mean that an audit has commenced. You must still await either a formal Notification of Audit (where the audit has been allocated to a specific auditor) or a Notice of Assessment (where a finding was made during the verification and the audit did not commence).
SARS may also obtain supporting documentation from third parties, if they deem necessary to do so. An audit could take up to 120 business days to complete.
As your trusted accountant or tax practitioner, we will continue to submit the relevant supporting documents to SARS on your behalf, should you be selected for a verification / audit, to ensure that the case is timeously finalised.
To enable us to submit the required supporting documentation, please ensure that you submit the relevant supporting documents to your accountant or tax practitioner to be kept on file.
Please see below list of supporting documents that may be required by SARS, depending on your personal profile.
Please note that this is not an exhaustive list and only an extract of the most common supporting documentation required.
Individual Tax Returns
- IRP5/IT3(a) Employees Tax Certificate (if applicable)
- Certificates received for local interest income, foreign interest income and foreign dividend income
- If you are married in community of property, the certificates received by both you (the taxpayer) and your spouse are required
- If you married out of community of property, only the certificates that you receive are required.
- Documents relating to medical expenditure such as:
- The income tax certificate from your medical scheme received for the period 1 March 2017 and ending 28 February 2018 (if you belong to a medical scheme)
- Proof of qualifying medical expenses paid by you and not recovered from a medical scheme
- Completed ITR-DD Confirmation of Diagnosis of Disability form (if you want to claim disability related expenses).
Trust and Company Tax Returns
- The income tax certificate(s) received from the financial institution to which contributions for retirement annuities were made.
- If you received a travel allowance or a fringe benefit for an employer provided vehicle, you must have a logbook to claim the business travel deductions and a purchase agreement for the vehicle claimed. Please note that SARS no longer accepts license disks as proof of ownership.
- All information relating to capital gain transactions (local and foreign)
- Documents and receipts for commission related expenditure including a logbook to claim business travel deductions
- Rental income, SARS requires all information relating to the letting of assets (Rental agreements, bond statements, receipts for rates and taxes, levies, maintenance, etc)
- Financial statements for trading and farming activities (if applicable)
- Any other documents relating to income that must be declared or deductions that may be claimed.
- Assets and liability statements if required.
- Copy of the signed Annual Financial Statements
- Tax Computation
All documents must please be A4 size and one sided.
If you have any questions, please do not hesitate to contact us!
Important Deadlines to REMEMBER:
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)
||Type of Taxpayer
|Manual – post or at SARS branch
||21 September 2018
||Non-provisional and provisional
|eFiling or electronic filing at SARS branch
||31 October 2018
||31 January 2019