Tax Records In The Cloud
31 January 2013
Posted by: Author: Alton Netshivhungululu
Tax Records In The Cloud
Storing Tax Records In The Cloud: What Are SARS’ Requirements?
Taxpayers are generally required to retain records, books of account or documents needed to comply with a specific tax Act.The Tax Administration Act, 2011 (TAA) prescribes the form in which records, books and account documents have to be kept or retained. Specifically, the TAA requires that records are kept in their original form, in an orderly fashion, and in a safe place. In the event that the records are retained in an electronic format, it must comply with the public notice issued in the Government Gazette Notice No 787 on 1 October 2012.
According to section 30(1)(b) of the TAA: "…records, books of account, and documents must be kept in the form, including electronic form, as may be prescribed by the Commissioner in a public notice...” The public notice on electronic record keeping specifically requires that electronic records must be in an "acceptable electronic form”.
Acceptable Electronic Form
Rule 3.2 of the public notice essentially introduces standards of integrity envisaged in the Electronic Communications and Transactions Act with regard to electronic record keeping. In addition, the storage of records must be in a format that SARS can readily access, read and analyse. In addition, the taxpayer should be able to provide SARS with an electronic copy of the tax records within a reasonable time.
Electronic Tax Records Must be Stored On A Server That is not Physically Present In South Africa
The public notice, in rule 4, further specifies that the location of the electronic records must physically be in South Africa, unless a senior SARS official has agreed to another location. Before such permission will be granted, the senior SARS official must be satisfied that the electronic system used by the taxpayer will be accessible from the person’s physical address in South Africa for the duration of the period that the person is obliged to keep and retain the tax records. In addition, the locality where the records are kept may also not affect access to the electronic records.
The taxpayer is required to keep proper system descriptions regarding the electronic system utilised. In the event that the software used by the taxpayer is commonly recognised, e.g. a popular local software system such as AccFin or Pastel, the taxpayer is not required to retain systems descriptions relating thereto. However, if the software used by the taxpayer is not commonly recognised in South Africa, or has been adapted for the taxpayer’s particular environment, rule 5 of the public notice requires that the taxpayer retain the system descriptions.
Storage And Backup
Rule 6 requires that measures are taken for the adequate storage of the electronic records for the duration of the record-keeping period envisaged in section 29 of the TAA. All electronic signatures, login codes, keys, passwords or certificates required to access the electronic records, and the procedures to obtain full access to any electronic records that are encrypted, must be stored.
Inspection by SARS
Rule 7 places an onus on persons keeping electronic records to have the records available for inspection by SARS in terms of section 31 of the TAA at all reasonable times, and at premises physically located within the country, or accessible from local premises if permission is granted under rule 4. Rule 8 specifically requires that the electronic records must be made available for purposes of an audit or investigation conducted by SARS in terms of section 48 of the TAA.
In order to comply with section 29 of the TAA, the requirements of the public notice described in this article must be adhered to throughout the period that the person is required to keep the records.Tax practitioners should take note of the new requirements and assist clients with getting their affairs in order. Failure to retain records as required by the TAA is a criminal offence in terms of section 234(e) of the Act.
Source: By Alton Netshivhungululu Deputy Chief Executive, SA Institute of Tax Practitioners (TaxTalk)