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The relevant problems associated with supporting documents

Thursday, 23 October 2014   (0 Comments)
Posted by: Author: Lesedi Seforo
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Author: Lesedi Seforo (SAIT Technical)

In the course of carrying out its mandate of assessing and collecting taxes owed to the government, the South African Revenue Service (SARS) frequently has to request "relevant material” from taxpayers. This is the more technical name for what most people know as "supporting documents”, in other words, invoices, receipts and other records that prove income was earned or expenses were incurred. 

Currently, relevant material is defined as "any information, document or thing that is foreseeably relevant for the administration of a tax Act…”

You can think of it this way, if any information, document or thing will possibly impact the calculation of the tax you will owe SARS, it qualifies as "relevant material”. 

The definition as it currently stands, however, has caused practical challenges for SARS. It has been stated that when a request for the material is made, many taxpayers have refused point blank, claiming the requested material is not relevant for the administration of a tax Act. In an attempt to address this issue, an amendment to the definition was proposed in the 2014 draft Tax Administration Laws Amendment Bill (TALAB). The proposed wording of relevant material would read "any information, document or thing that in the opinion of SARS is foreseeably relevant for the administration of a tax Act”

In the presentations to the Standing Committee on Finance (SCoF), the South African Institute of Tax Professionals (‘SAIT’), submitted that the proposed change gives SARS the power to unilaterally determine what is relevant, thus overriding the taxpayer‘s ability to question the relevance of information requested by SARS and potentially leading to an abuse of power. This contention was, however, rejected, stating that there are other remedies available to taxpayers should they wish to challenge SARS’ request for the material on the basis of relevance. It was further held that the international literature on this subject shows that the test for what is foreseeably relevant has a fairly low threshold. Bottom line: the proposed definition for relevant material is here to stay. That’s one point to SARS and zero for the taxpayer….for now.

The impact on tax clearance certificates 

Relevant material is also connected to what is commonly referred to as a tax clearance certificate ("TCC”). Currently, a taxpayer who applies for a TCC will receive one unless there is an outstanding tax return or debt. The 2014 draft TALAB, however, sought to add an additional hurdle that would have to be cleared by taxpayers who want to qualify for the TCC: if there was a request from SARS for the taxpayer to provide relevant material and the taxpayer has not done so without just cause for the delay, then that person will not be issued with the tax clearance certificate. 

Possible problems 

This proposal is clearly fraught with issues and the fact that SARS, in practice, tends to request the same supporting documents over and over doesn’t help the situation. Suppose a small business files its VAT return and is due a refund for a particular 2-month VAT period. As is becoming the norm with SARS, a VAT refund will almost always trigger a request for relevant material. Because the owner of this small business is a good citizen, he wants to make sure he does everything by the book. So he has his SAIT tax professional scan and upload the supporting documents on efiling and click the ‘send’ button. Two months down the line, his business still hasn’t received the VAT refund and SARS informs him that they are holding onto it as they have begun a fully-fledged audit, so he should send them supporting documents so that they can audit properly. A taxpayer may assume this is a mistake (because he already submitted the supporting documents previously) and ignore SARS’ request. In the meantime, he had applied for a R5 million tender and was effectively told that he has the best chance of winning the bid, all that remains is getting the TCC from SARS. A month later, he confidently applies for the TCC, knowing his company has no outstanding tax returns or debts; only to get the shock of his life when he finds out that it was declined because he did not send the relevant material to SARS. This scenario illustrates one of the problems with Treasury’s proposal to add relevant material as a requirement for obtaining a TCC. 


It was submitted to the SCoF that there are numerous scenarios (besides the above-mentioned) that can present themselves and reflect a request for relevant material as being outstanding, thereby jeopardising the taxpayer‘s financial position due to inability to obtain the TCC. Fortunately this submission was accepted by the SCoF. Final score: one point to SARS, one point to the taxpaying community. The downside, however, is that the issue will be revisited again during the 2015 legislative cycle. The battle may have been won, but the war is far from over.

On this note, it is of paramount importance that taxpayers contact their SAIT tax professionals whenever a request for relevant material is received from SARS. SAIT tax professionals are highly trained individuals who would ensure that everything is taken care of so that taxpayers can focus on the one thing that matters – the bottom line of their businesses.



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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