Which Documents Do You Need to Submit to SARS for Your Tax Return?
Which Documents Do You Need to Submit to SARS for Your Tax Return? When you submit your tax return and receive an assessment (ITA34), you may also receive a letter from SARS asking you to provide supporting documents. To check if you have been selected for verification, review your ITA34. Look for the “Compliance Information” section, which indicates whether you have been selected for audit or verification with a “Y” (Yes) or “N” (No). If you see an “N,” you can breathe a sigh of relief—SARS likely doesn’t need anything further from you this tax year. However, if there is a “Y,” it means SARS requires evidence or documentation to back up the amounts reported on your tax return. Unfortunately, this is becoming more common. This is why we think you should always put your tax documents together before the tax season starts. From our experience, SARS can request a wide range of documents. The best way to prepare is to review your tax return thoroughly and ensure you have supporting documents for each item reported. The SARS letter will usually specify the documents needed, so read it carefully and make sure you provide everything requested. To simplify the process and ensure you’re well-prepared, we’ve put together a table that outlines the most common expenses and the specific supporting documents SARS might request, tailored to the type of taxpayer you are: Expense Salaried Employee Commission Earner (more than 50% of income from commissions) Sole Proprietor / Freelancer / Independent Contractor Depreciation on Business Assets (e.g., laptop) – Letter from employer stating you can use a personal laptop for work – Proof of purchase (invoice) – Calculation of wear and tear – Letter from employer stating you can use a personal laptop for work – Proof of purchase (invoice) – Calculation of wear and tear – Proof of purchase (invoice) – Calculation showing how wear and tear was calculated and apportioned between business and personal use Medical Costs – Medical Aid Tax Certificate – Invoices from doctor/pharmacy and receipts (POPs) for qualifying expenses not submitted to Medical Aid – Medical Aid Tax Certificate – Invoices from doctor/pharmacy and receipts (POPs) for qualifying expenses not submitted to Medical Aid – Medical Aid Tax Certificate – Invoices from doctor/pharmacy and receipts (POPs) for qualifying expenses not submitted to Medical Aid Uber Costs – Cannot claim – Uber receipt (email) – Uber receipt (email) Home Office – Letter from employer stating you can work from home and % time spent there – Calculation showing apportionment – Supporting invoices – Letter from employer stating you can work from home and % time spent there – Calculation showing apportionment – Supporting invoices – Calculation showing apportionment – Actual invoices supporting claim (electricity, water, rates, bond statement, rental invoice, etc.) Bank Charges – Cannot claim – Bank statement reflecting bank charges for your business account – Bank statement reflecting bank charges for your business account Entertainment – Cannot claim – Schedule of entertainment expenses detailing names of attendees, the purpose of the meeting, etc. – Restaurant invoices/receipts – Schedule of entertainment expenses detailing names of attendees, the purpose of the meeting, etc. – Restaurant invoices/receipts Travel – Logbook with details of business mileage – Vehicle purchase invoice (if applicable) – Fuel, maintenance, license, and insurance invoices (if actual costs are claimed) – Logbook with details of business mileage – Vehicle purchase invoice (if applicable) – Fuel, maintenance, license, insurance invoices – Logbook with details of business mileage – Vehicle purchase invoice (if applicable) – Fuel, maintenance, license, insurance invoices Telephone – Cannot claim – Sample of actual monthly invoices – Calculation showing how total expenses were apportioned between business and personal use – Sample of actual monthly invoices – Calculation showing how total expenses were apportioned between business and personal use Key reminders: SARS does not accept schedules or lists of expenses on their own—you must provide scanned copies of the actual invoices or receipts. Make sure that your supporting documents match the total expenses you’ve claimed on your tax return. Submit all calculations, ensuring they are clear, detailed, and easy for SARS to understand during their review Ready to make tax season stress-free? Let us help you get your documents in order and avoid costly mistakes. Contact us today and get expert guidance on all your tax needs—because your peace of mind is priceless!
How to get a SARS refund quickly; Essential Preparation Guide for Faster Tax Refunds
How to get a SARS refund quickly? We are reaching out early to ensure you’re fully prepared for the upcoming tax season. Once it opens, you’ll be ready to submit your tax return and potentially receive your refund sooner. Why wait? What do you need to get ready? You will need: Necessary documentation for submission. To address any administrative issues. Information on auto-assessments. Knowledge of basic deductions you can utilize. Documentation: The responsibility for proving entries on a tax return lies with the taxpayer. It’s crucial to compile documents throughout the year as you receive them. If you haven’t started, now’s the time to gather: IRP5s issued by your employer. If not received, request them politely. Medical aid and retirement annuity tax certificates are typically available via provider apps. Profit and loss statements if you run a business or are a sole proprietor. Details of rental income and expenses. Invoices supporting business and rental expenses. Home office expense details and corresponding invoices. Investment certificates for interest, dividends, and capital gains. Section 18A certificates for any donations made. Travel logbook for business travel claims. Details of non-personal use assets sold during the tax year. Any additional documents supporting your tax return. Admin Issues: Ensure your eFiling login details are handy and functional. Verify and update your bank details with SARS to avoid delays in receiving refunds. Auto-Assessments: SARS may issue an auto-assessment using data from third parties like medical aids or retirement funds. If you agree with the assessment, no action is needed. If you disagree, you have 40 working days to file a correction. If you miss the deadline, you can request an extension within 21 additional working days. Basic Deductions You Can Claim: Understand the deductions available to legally reduce your tax liability, such as: Medical aid tax credits. Retirement annuity contributions. Donations. Home office expenses. Tax-free savings. Foreign income exemption. Interest exemption. Travel expenses. Wear and tear. Business expenses. Capital gains exclusion. Frequently Asked Questions: How to get a SARS refund quickly? To get a SARS refund quickly, ensure you submit a complete and accurate tax return as soon as the tax season opens. Gather all necessary documentation beforehand, resolve any administrative issues, and verify that your bank details are up to date with SARS. Not having the correct and updated bank details may unnecessarily delay your refund. How quickly does SARS pay a refund? SARS typically processes refunds within 21 business days after a tax return has been submitted and assessed. However, this can vary depending on the accuracy of your submission and if any additional reviews are needed. Can you get your refund instantly? In some instances, SARS refunds within a few days, even a few hours especially where all is in order and there are no audits or verifications needed. While you cannot get your SARS refund instantly, ensuring that your tax return is accurate, complete, and submitted early can help expedite the process. Make sure all your documentation is in order to avoid delays. How to get a SARS refund quickly? You can speed up your SARS refund by promptly submitting a complete and accurate tax return with all required documentation. Regularly check your SARS eFiling profile for any updates or additional requests for information and respond quickly to any additional requests from SARS. What’s the fastest I can get my tax refund? The fastest way to get your tax refund from SARS is to file your return as early as possible, ensure all details are correct, and have all supporting documents ready. Typically, refunds are processed within 21 business days, but early and accurate submissions can help avoid delays. We encourage you to submit your tax return as soon as the tax season opens and to do so accurately and completely. Additionally, do not delay sending supporting documents to SARS as may be required. Why was my tax refund reversed by SARS? I do not understand why the refund that was due to me disappeared from my Sars statement. The refund was reversed for the following most likely reasons: – There is a special stopper on your account; – You have two valid bank accounts reflecting on your registered details and/or – You do not have valid bank details registered with SARS – Also, check if they issued a “verification completed with changes letter” How we may help: We are eager to assist you with your tax affairs, including tax return submission, interpreting assessments, and objections to issued assessments. Feel free to reach out for any help or information. Leave a message/get a quote Subscribe now:
What are the tax implications of trading or buying shares?
What are the tax implications of trading or buying shares? The tax implication for having shares boil down to two things, whether your gain is income in nature or capital (gain) in nature. Let’s start by defining these two things: Income: Shares held as trading stock are bought mainly for resale at a profit. In other words, any shares held for speculative purposes normally fall under this category. The profits or any gain or loss made on the disposal of such shares (held for-profit/speculative) purposes will be of a revenue nature and will not be subject to capital gains. Gains of a revenue nature are subject to tax at marginal tax rates that vary between 18% and 45% depending on the circumstances of the taxpayer after taking into account all his/her other income (such as salary, rent, business income e.t.c.) The taxpayer can also deduct expenses directly related to the trading of these shares such as broker fees, transaction fees, subscription to broker news, tools and platforms and any such costs directly related to the trading of these shares. Capital: On the other end of the spectrum, for shares held as a capital asset (that is as a long-term dividend producing investment,) any gains or losses arising from such shares (held for investment/dividend earning) upon disposal will be of a capital nature. Gains that are of a capital nature are subject to capital gains and at a lower tax rate than gains of a revenue nature. Firstly, you get an exclusion of R40 000 as an individual on your gains. This means that you start paying capital gains tax if your gains exceed R40 000 for a tax year (year of assessment.) This is known as the annual exclusion. For natural persons dying during or after the 2020 tax year of assessment, the exclusion is R300 000. In addition to the annual exclusion, 40% of the gains are included in taxable income and then taxed as the normal marginal tax rates that apply to your salaries or other income. This 40% is known as the inclusion rate. Assuming that your marginal tax rate is 45% (the highest tax bracket,) the maximum you pay on capital gains is 18% (0.4 x 0.45 = 0.18.) Yes, you guessed it right, there can be 0% tax on your capital gains when: The sum of capital gain and losses does not exceed the annual exclusion; The sum of capital gain is less than or equal to the sum of capital losses (which means your gains set off against your gains); or Taxable income falls below the level at which normal tax becomes payable, that is if your combined income plus gains fall under the tax-free threshold. The effective rate (of 18%) we spoke about earlier applies if you fall in the highest tax bracket as an individual taxpayer. The rate is different from that which applies to companies or trusts. Companies and trusts, other than special trusts, pay a higher CGT than natural persons. They do not qualify for the annual exclusion and must include the capital gain at 80% of the gain into their taxable income. These are the effective tax rates: Companies are at an effective rate of 22.4% which is derived from the 80% inclusion rate and the 28% normal taxes for companies (0.28 x 0.8.) A trust that is not a special trust si at 36% effective tax rate for capital gains (0.45 x 0.8) What we have done above is the simplest way to look at share-holding. Are things that simple? Not always. The line between gains/losses of a revenue nature or gains of a capital nature can be a bit blurry. Capital vs revenue: When computing your tax liability, the first step is to determine if your gains are capital or revenue in nature. Apart from the three-year rule according to Section 9C (that basically says you must own a share for at least 3 years for your gains to be treated as capital in nature,) the Tax Act itself does not provide objective rules to distinguish between gains of revenue and capital nature. This task has always been left to the courts, which over the years have established some rules for this distinction. So, the onus is on you as the taxpayer to prove that your gains are of a capital or revenue nature. The most important factor in establishing the nature of your gains is the intention. This is not always an easy task since you can have more than one intention at a time and since intention can change over time. But, the courts have established that the taxpayer evidence as to intention must be tested against the surrounding circumstances of the case. These may include, the frequency of transactions, method of funding and reasons for selling. These may help establish your intention when you bought or sold the shares (Elandsheuwel Farming (Edms) Bpk v SBI.) “If they (the shares) were bought as a long-term investment to produce dividend income, the profit is likely to be of a capital nature. But if the shares were bought for resale at a profit, the profit will be of a revenue nature.” In SIR v The Trust Bank of Africa Ltd it was established that for a profit to be of a capital nature, “the slightest contemplation of a profitable resale need not be excluded. Where there were mixed intentions, the dominating intention is the one that establishes intention (COT v Levy.) Some general guidelines/Principles (source, the SARS guide on tax implications on shares:) Any profit or loss on disposal of shares will be of a revenue nature if they were purchased for resale as part of a scheme of profit-making (Californian Copper Syndicate (Limited and Reduced) v Harris (Surveyor of Taxes) A profit on the sale of shares is more likely to be of a revenue nature if it was not fortuitous, but designedly sought for and worked for (CIR v Pick ’n Pay Employee Share Purchase
Effective Steps to Successfully Close a Business in South Africa (Guide)
Effective Steps to Successfully Close a Business in South Africa: CIPC and SARS Deregistration Guide (2026) Quick Answer: How Do You Close a Business in South Africa? To close a registered company in South Africa, you must first determine whether it qualifies for voluntary deregistration or requires a formal liquidation process. For a company that has stopped trading and has settled its assets and liabilities, the closure process generally involves: Reviewing the company’s financial position. Collecting outstanding customer payments. Settling creditors and other liabilities. Addressing employee and contractual obligations. Disposing of business assets and stock appropriately. Finalising accounting records and outstanding tax returns. Applying for CIPC deregistration where eligible. Cancelling the relevant SARS tax registrations and other employer registrations. Retaining the required business records. Important: Simply stopping trading does not automatically close a company or end its tax obligations. The correct process depends on whether the company is solvent, has outstanding debts or still owns assets. 1. What Is the Difference Between Deregistration and Liquidation? Before closing a business, it is essential to understand the distinction. Deregistration Liquidation Generally appropriate for a company that has ceased trading and meets CIPC eligibility requirements Formal winding-up process for a company with assets or liabilities requiring administration Removes the company from the CIPC register Involves the legal administration and winding-up of the company’s affairs Usually simpler where all affairs have been finalised Usually involves additional legal procedures and a liquidator Does not provide a lawful shortcut for avoiding creditors Provides a formal process for dealing with creditors and distributing assets Subject to CIPC requirements and objection procedures May apply to solvent or insolvent companies under different legal procedures CIPC also provides for certain deregistration situations involving insufficient assets to justify liquidation. These cases require careful consideration, particularly where liabilities remain. A company can therefore be solvent and still require a formal winding-up process. 2. Why Would Someone Decide to Close a Business? Business owners may decide to close their companies for several reasons. These include: Continued financial losses. Insufficient cash flow or working capital. Retirement or a change in career. Completion of a specific project. Changes in market conditions. Loss of major customers. Technological changes affecting the business. A decision to focus on other investments or businesses. Shareholder or ownership changes. A business that was registered but never commenced trading. Not every struggling business needs to close. Depending on the circumstances, restructuring, selling the business or negotiating with creditors may be possible alternatives. 3. Start With a Business Closure Plan A structured closure plan helps business owners identify outstanding responsibilities before beginning the deregistration process. Start by preparing a current financial position. Review: Bank balances. Trade receivables. Trade payables. Outstanding loans. Inventory. Vehicles and equipment. Tax liabilities. Employee obligations. Existing contracts. Shareholder loans. Other assets and liabilities. This information helps determine whether the business can settle its debts and whether deregistration or liquidation is appropriate. Example: Assessing a Company’s Financial Position Suppose a company has the following position: Description Amount Cash available R40,000 Customer balances recoverable R80,000 Estimated net proceeds from assets R100,000 Total estimated available resources R220,000 Trade creditors R90,000 SARS liabilities R30,000 Other liabilities R40,000 Total liabilities R160,000 Estimated surplus before closure expenses, additional taxes and other adjustments: R60,000 This suggests that the company may have sufficient resources to settle its recorded liabilities. However, it does not establish that the company is legally solvent or that deregistration can begin immediately. The company must still consider contingent liabilities, asset realisability, tax consequences and the appropriate closure procedure. 4. Notify Employees and Comply With Labour Legislation If your business employs staff, closure may involve retrenchments or other lawful termination arrangements. Employers must consider the Labour Relations Act, including the applicable consultation requirements for dismissals based on operational requirements. Depending on the circumstances, obligations may include: Consultation with affected employees. Consideration of alternatives to dismissal. Appropriate notice. Statutory severance pay where applicable. Outstanding remuneration. Accrued leave payments. UIF documentation. Relevant employment certificates and records. Example: Severance Pay Under the general statutory minimum for qualifying operational-requirements dismissals, severance pay is at least one week’s remuneration for each completed year of continuous service, subject to applicable legal provisions. Suppose an employee earns R5,000 per week and has completed four years of continuous service. Illustrative minimum severance: R5,000 × 4 = R20,000 Other termination payments may also be payable. Important: The calculation of remuneration, eligibility for severance and any applicable exceptions must be assessed under the relevant employment legislation. Business closure does not automatically remove an employer’s labour-law responsibilities. 5. Inform Customers and Review Existing Contracts Customers should receive appropriate notice where the business can no longer provide products or services. Review outstanding contractual obligations, including: Customer agreements. Supplier agreements. Property leases. Equipment rentals. Software subscriptions. Insurance policies. Service agreements. Finance contracts. Some agreements may contain notice periods, cancellation charges or other termination provisions. Do not assume that closing the company automatically cancels its contractual obligations. 6. Collect Outstanding Debtors Before closing the business, review all outstanding customer accounts. Prepare a debtors age analysis showing: Amounts outstanding. Due dates. Overdue balances. Disputed invoices. Potentially irrecoverable debts. Where appropriate, follow up with customers and consider lawful collection arrangements. Why Is This Important? Outstanding debtors are company assets. If a company still has recoverable receivables, it may not yet satisfy the requirements for straightforward voluntary deregistration. Uncollected balances should therefore be properly addressed before the company is closed. 7. Settle Creditors and Outstanding Liabilities A business must properly address its liabilities before pursuing a closure process. These may include: Suppliers. Banks and finance providers. Employees. Landlords. SARS. Shareholder loans. Other creditors. Where the company cannot pay its debts, directors should seek professional advice on the appropriate legal process. Do not distribute remaining cash to shareholders while ignoring outstanding creditors. What If the Business Owes SARS? Depending on the circumstances, SARS may permit a qualifying taxpayer to apply for a payment arrangement or compromise of tax debt. These are formal processes subject to statutory requirements and SARS approval. They