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Be prepared for the tax season

27 Jul 2015

Conrad SmithIn the SARS document, Compliance programme 2012/13 – 2016/17, SARS has stated its objectives for the period until 2017. With the 2014/2015 tax filing season that started on 1 July 2015, it may be worth your while to note the seven focus areas identified in this document.

They are:

  • wealthy South Africans and their associated trusts,
  • large businesses and transfer pricing,
  • the construction industry,
  • illicit cigarettes,
  • tax practitioners and trade intermediaries,
  • undervaluation of imports in the clothing and textile industry,
  • small businesses.

Tax payers who fall in one of these categories should enlist the assistance of an accountant or tax practitioner to ensure that their affairs are in order, e.g. that they are able to provide supporting documentation for the information submitted to SARS.

The compliance document has also confirmed that SARS will continue with its risk-based compliance work using verification, and will not overlook those areas outside the seven focus areas.

According to SARS, it currently has about 2 300 wealthy individuals on record. They are significant contributors to South Africa’s tax basket. SARS is implementing various measures to achieve its goals regarding these individuals, including collaboration with the Master’s office, improving its ability to trace funds, and lifestyle questionnaires.

Specific areas that will be under increased scrutiny are:

  • trusts,
  • associated entities,
  • offshore investments,
  • artificial losses and deductions,
  • revenue declared as capital, and
  • fringe benefits.

Since the 2015 filing season may introduce a substantial increase in queries from SARS, now is a good time to gain an understanding of the documentation required for tax payers’ trusts.

Small businesses are also in the limelight. SARS realises the vital role that small businesses play in the economy, and aims to simplify the process of meeting their tax obligations while entrenching a culture of voluntary compliance.

To achieve this goal, Government has implemented a number of initiatives over the years, e.g. increasing the threshold in VAT and SDL registration. The following compliance activities are described in the compliance programme:

  • encouraging small businesses toward a developed structure of record-keeping for the purpose of sound business practice and assistance with tax compliance,
  • providing more electronic options for registration, filing and payments, and
  • imposing administrative penalties for non-compliance including late submission of returns.

Taking the above information into account, it is in tax payers’ interests to have all supporting documentation in order and ready in the event of SARS queries or verification. To make verification processes painless, here are some pointers for the upcoming filing season:

  • Tax payers should be able to prove all information they submit to SARS.
  • Gain a basic understanding of the process and SARS requirements.
  • Should your tax practitioner be tasked with the responsibility of filing your tax return, provide him/her with the information earlier rather than later, and
  • Provide your tax practitioner with all supporting documentation. When SARS initiates verification, the tax practitioner has limited time available to provide the required information.
  • With reference to supporting documentation relating to trusts, tax payers should ensure that trust deeds are in order and that all decisions pertaining to trusts are reflected in minutes.

 

Please contact Conrad Smith on 021 915 6666 for more information on the 2014/2015 filing season.

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