Retention periods for accounting documents

Due to various legislative requirements, accounting documentation should be retained for a certain period. To assist clients with ascertaining the relevant retention periods, a summary of the most important acts and provisions is supplied.

In terms of the Companies Act, no 71 of 2008 and Companies Regulations 2011, companies should keep documentation in written form, or any other form or manner that allows the information to be converted into written form within a reasonable time. The retention periods for specific documents are:

Indefinite:

• Registration certificate
• Memorandum of Incorporation and alterations or amendments thereto
• Rules
• Securities register and uncertificated securities register
• Register of company secretary and auditors
• Register of disclosures of person who hold beneficial interest equal to or in excess of 5% of the securities of that class issued in the case of regulated companies (i.e. companies to which chapter 5, part B, C and Takeover Regulations apply).

7 years:

• Any documents, accounts, books, writings, records or other information required to be retained, e.g. notices and minutes of all shareholders’ meetings, resolutions passed at meetings and documents made available to holders of securities
• Copies of reports presented at the annual general meeting of the company
• Copies of annual financial statements required by the Act
• Copies of accounting records as required by the Act
• Record of directors and past directors
• Written communication to holders of securities
• Minutes and resolutions of directors’ meetings, audit committee and directors’ committees.

In terms of the Close Corporations Act, no 69 of 1984, the retention periods for specific documents are:

Indefinite:

• Founding statement
• Amended founding statement
• Microfilm image of any original record reproduced directly by camera
• Minutes books
• Resolutions passed at meetings.

15 years:

• Accounting records, including supporting schedules to accounting records and ancillary accounting records
• Annual financial statements, including annual accounts and the report of the accounting officer.

In terms of the Income Tax Act, no 58 of 1962 (Section 73 A & B), tax payers should keep documents in their original form or electronic format as prescribed by die Commissioner. The retention periods for specific documents are:

5 years (from date return received from Commissioner):

• Records kept by a tax payer who has rendered a return, including: ledgers, cash books, journals, cheque books, bank statements, deposit slips, paid cheques, invoices, stock lists, other books of accounts, electronic representations of information
• Records relating to taxable capital gain or assessed capital loss, including:

1. agreement for acquisition, disposal or lease of asset
2. details of asset transferred into a trust
3. copies of valuations used in determining the taxable capital
4. gain or assessed capital loss
5. invoices or other evidence of payment records such as bank statements and paid cheques relating to any costs claimed in respect of the acquisition, improvement or disposal of any asset
6. details supporting the proportional use of an asset for both private and business purposes
7. details of any continuous absence of more than six months from a primary residence, as contemplated in the Eight Schedule.

In terms of the Value Added Tax Act, no 89 of 1991 (Section 55), VAT vendors should keep documents either in a book form or in any other form. The retention periods for specific documents are:

5 years (i.e. if in book form, 5 years after the completion of the last entry; if in any another form, 5 years after the completion of the last transactions to which it relates):

• Record of all goods and services, including: the rate of tax applicable to the supply and the suppliers or their agents, invoices, tax invoices, credit notes, debit notes, bank statements, deposit slips, stock lists
• Records of importation of goods and documents, including: bill of entry, documents prescribed by Customs and Excise Act, receipt for payment of import tax
• Information relating to: charts and codes of accounts, accounting instruction manual, system and programme documentation which describes the accounting system used in the various accounting periods.
• Documentary proof substantiating the zero rating of supplies.

For more information, contact Sunel Swart of Tenk Loubser & Associates on 021 915 6666 or e-mail sunel@exceed.co.za