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Pick your battles carefully in tax season: expert advice

Monday, 26 June 2017   (0 Comments)
Posted by: Author: Amanda Visser
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Author: Amanda Visser (Business Live)

SARS is a stickler for documentation and a tardy payer, so don’t claim unless your records are complete, and don’t overpay unless you’re prepared to wait for your refund

The start of this year’s tax filing season is around the corner, and for those who have not been diligent with their recordkeeping, things are going to become messy from now on.

The South African Revenue Service has been quite vigilant in requesting supporting documentation whenever there is the possibility of a refund.

Patricia Williams, partner at law firm Bowmans, says as a general rule she recommends that people have proper schedules of all expenses, deductions or other allowances claimed.

"In other words do not simply use estimates," she says. If a taxpayer has proper schedules, "If and when there is a query from SARS, there will be a good starting point for dealing with the query."

It is also often better to walk away from a tax deduction if you do not have the necessary supporting documentation.

It is better than spending the time, effort and cost of dealing with a dispute that may arise, says Williams, who is also a member of the tax administration committee of the South African Institute of Tax Professionals (SAIT).

Taxpayers and tax practitioners have been reporting an increase in audits. However, if one looks at the SARS annual reports, there has not been a significant increase in the absolute number of audits.

Williams says the extent of auditing has increased. In the past individuals would typically be requested to substantiate one or two items, but it is much more common for audits to extend over multiple "line items", and even to all expense claims or deductions.

SARS is supposed to notify the taxpayer of any proposed audit adjustments and give the taxpayer 21 business days to respond, before issuing revised assessments.

"In practice this often does not happen. SARS often simply issues revised assessments, disallowing all deductions, if the taxpayer does not respond to a SARS request for supporting documentation," says Williams.

"While this practice is not lawful, legal steps to challenge this can be expensive. In these circumstances, taxpayers should be careful to take all requests for information from SARS very seriously, to prevent the situation where SARS issues assessments and simply takes the money out of your bank account."

The practical reality is that people often compile their tax returns from supporting documentation such as bank statements or credit cards, rather than the invoices, and then getting supporting documentation can take some time.

"The other challenge is that SARS often sends quite standardised supporting documentation requests, as opposed to requesting only specific documents."

Williams recommends that taxpayers provide SARS with reasonable starting supporting documentation, and a note that further documents can be provided if requested.

"Adopting a practical approach that gives SARS enough information to audit, without drowning the agency in paperwork, is usually most effective," says Williams.

The annual filing season kicks off on July 1 and ends at the end of January next year. There are different submission deadlines for different taxpayers.

The first deadline is September 22 for taxpayers who file manually through the postal system or at a SARS branch. Nonprovisional taxpayers who are e-filing or doing electronic filing at a SARS branch — presumably the majority— have until November 24. Provisional taxpayers who use e-filing have until the end of January next year.

Income includes salaries, wages or bonuses, profits or losses from a business or trade, director’s fees, investment income, rental income or losses, and pension income.

Some taxpayers do not have to submit any tax returns, if they meet certain criteria such as not earning more than R350,000 a year before tax, and if the taxpayer only has one employer.

Williams says there are certain steps taxpayers can take to ensure a "painless" submission. This includes keeping logbooks, which are "absolutely critical" when claiming travel expenditure.

Many people like to be cautious, and rather overpay their provisional tax.

However, Williams says there have been delays in receiving refunds from SARS over the past while.

Taxpayers should be cautious, when submitting provisional tax returns, to pay enough tax to prevent underestimate penalties, while also not paying so much that a tax refund is likely.

"Put simply, this means that one should typically do one’s tax calculations a lot earlier, basically just before the end of the tax year, so that the second provisional tax payment can be as accurate as possible."

The 2017 year of assessment (tax year) runs from March 1 2016 to February 28 2017.

This article first appeared on



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