FAQ - 26 March 2015
24 March 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
1. Can SARS request supporting documents be made only telephonically or must they write a letter?
Q: Our client submitted his 2014 tax return and was informed telephonically by SARS that they request his logbook for prior years.Are we allowed to ask a SARS auditor to put that in writing a request for a logbook for 2012 and 2013 tax year?
For the 2012 & 2013 tax years, SARS has requested supporting documentation, which we submitted, and my client received his refund during these tax years based on the information he submitted. So surely this information should already be on their system, and the auditor can simply check there?
My thinking is that if SARS is going to do an audit of previous tax years, a letter should be drafted by the auditor (not a telephonic request) and there must be section in the Income Tax Act or TAA that we can use to advise SARS that the client has a certain amount of time (maybe 21 working days) to provide documentation they require for 2012 and 2013 tax year.
A: You are not prohibited from asking that he requests the logbook is writing; it’s the wise thing to do.
Just be aware of section 46(1) of the Tax Administration Act, which deals with SARS requests for relevant material:
"SARS may, for the purposes of the administration of a tax Act in relation to a taxpayer, whether identified by name or otherwise objectively identifiable, require the taxpayer or another person to, within a reasonable period, submit relevant material (whether orally or in writing) that SARS requires.”
Relevant material is then defined in section 1 of the same Act as:
‘any information, document or thing that is foreseeably relevant for the administration of a tax Act as referred to in section 3’
Unfortunately the SARS auditor would not have to make his request in writing, if he doesn’t want to. But I believe if you ask nicely he may make a formal request in writing.
2. Can a notional input VAT credit be claimed on purchases of used material from homeless persons?
Q: My client has a recycling business. He does not the manufacture paper and plastic but distributes them. The client purchases these used materials from non- vendors (basically homeless people) as he is buying rubbish paper.
Can the client claim notional input VAT on these purchases? If so, what is the procedure?
A: Your client (assuming he's a vendor) can claim notional input VAT on the purchases if he has a tax invoice to substantiate the purchase (see section 20 of the VAT Act). The tax invoice should also specify that the goods are second hand.
Additionally, the vendor must maintain records as provided for in section 20(8) of the VAT Act.
The provision states:
"...where a supplier makes a supply (not being a taxable supply) of second-hand goods...to a recipient, being a registered vendor, the recipient shall in the form as the Commissioner may prescribe, maintain a declaration by the supplier stating whether the supply is a taxable supply or not and shall further maintain sufficient records to enable the following particulars to be ascertained".
The abovementioned declaration is the VAT264 and can be accessed here:
3. Are fuel re-imbursement expenses paid to a member of CC subject to PAYE?
Q: When a member of a CC is reimbursed for the actual fuel expenses incurred on a monthly basis, will the re-imbursement be subject to PAYE? The member submits his actual fuel slips & 75% of the actual expense (fuel slips) is paid to him by the CC as a re- imbursement of the fuel expense incurred. He uses his own vehicle in his own name for company purposes, no travel logbook is kept.
A: Section 8(1)(a)(ii) ITA excludes from allowances any reimbursement that was wholly used for the purposes of the employer’s trade and for which the employee had to provide proof that it was so wholly incurred for business purposes. In such instances no PAYE applies. Where the petrol was not used for a single business trip or included private travel that the employee cannot prove that to the employer it must be treated as a travel allowance and subjected to PAYE.
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