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Sars’s guide to storing tax records

Thursday, 04 October 2012   (0 Comments)
Posted by: SAIT Technical
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By Stiaan Klue (SAIT) Published on Moneywebtax

On Monday October 1 2012 the majority of provisions of the Tax Administration Act, 2011 became effective. In addition to the law promulgated on July 4 2012, the Commissioner of Sars, Oupa Magashula, this week published a notice in the Government Gazette detailing the electronic form in which tax records, books of account and documents are required to be maintained and stored by taxpayers.

Taxpayers should however note that tax records stored and maintained electronically must be at a physical location in South Africa.

Taxpayers who store and maintain accounting or invoice records using cloud computing with servers in Canada for example, must seek approval from a senior Sars official first. But it is not that easy. The taxpayer must ensure that all the following conditions are met:

1. The records can be readily accessed from South Africa.

2. The locality of the records will not affect access to the electronic records.

3. South Africa has an international tax agreement for reciprocal tax assistance with the country where the servers are hosted.

4. The form of the records meet the storage requirements in all other respects.

5. An acceptable electronic form of the records can be produced by the taxpayer in South Africa.

In addition to the storage requirements, a taxpayer will also be compelled to develop a system description explanation if the software or electronic platform is not commonly recognised or used in South Africa. "This is good news to the major South African accounting software companies such as Pastel Accounting, Softline VIP, etc. However, off the shelf products developed in the US or India may come at a hidden cost, as a proper system description will have to be developed. But the relief to the major South African software companies will be short lived if modifications can be made to suit the environment of a specific taxpayer user. Once the system is modified, even minor modifications, the requirement to keep an accurate detailed system description is applicable and a compulsory.



Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

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