Section 93(1)(d) – Reduced assessment due to undisputed error
Reduced assessment due to undisputed error The South African Revenue Service (SARS) offers taxpayers a streamlined process to correct certain errors in tax assessments without resorting to formal objection and appeal procedures. This process, facilitated through the Request for Reduced Assessment (RRA01) form, allows taxpayers to request amendments to assessments to correct undisputed errors under specific sections of the Tax Administration Act (TAA). What is an Undisputed Error? An undisputed error, as defined under Section 93(1)(d) of the TAA, refers to a clear and obvious mistake in an assessment that both SARS and the taxpayer agree upon. These errors are factual, clerical, or typographical and are identifiable without requiring any legal interpretation or dispute over facts. Correcting these errors can be achieved without the need for a formal objection or appeal. Examples of undisputed errors include: Numerical or data entry mistakes in the taxpayer’s return. Clerical errors in the documentation submitted to SARS. Simple omissions that are not subject to differing interpretations (The correction does not involve any interpretation or legal argument, and there is no dispute over the facts.) When does undisputed error apply? Sections of the TAA Permitting Reduced Assessments SARS may reduce an assessment under the following sections of the TAA: Section 93(1)(d) – When there is a readily apparent undisputed error in: The return submitted by the taxpayer; or The assessment issued by SARS. Section 93(1)(e) – When SARS is satisfied that an assessment was based on: The failure of an employer or third party to submit a return; An incorrect return submitted by an employer or third party; A fraudulent return submitted by an unauthorized person; or A processing error by SARS. Important Considerations: Both sections require that the errors must be undisputed; if there is any contention or disagreement about the error, these provisions cannot be used. The application for these adjustments must be made within the prescribed period, typically three years from the date of the original assessment The Request for Reduced Assessment (RRA01) The RRA01 form provides a less formal mechanism for taxpayers to request SARS to amend an assessment, thereby reducing the assessment amount without going through the objection and appeal process. This option is particularly useful for quickly rectifying straightforward errors that do not involve complex legal disputes. Key Considerations for Using the RRA01 Form Limited Application: The RRA01 form does not replace the formal objection and appeal process but offers a less formal way to resolve errors that are readily apparent. It is only applicable under specific, limited circumstances where all requirements are met. Prescription Period: If an assessment has been prescribed (i.e., it is older than three years), an RRA01 in terms of Section 93(1)(d) will not be allowed. However, a separate RRA01 may be submitted under Section 93(1)(e) if applicable. Cases in Progress: If any of the following cases are in progress for the same assessment, a warning message will display, and the RRA01 form cannot be submitted until resolved: Revised Declaration Estimated Assessment Agreed Estimate Dispute Cases: If a dispute case is in progress for the same assessment, the RRA01 form can only be submitted after the dispute has been finalized. Active Audits or Requests for Relevant Material: If there is an active audit or a request for relevant material for the same year of assessment, the RRA01 form can only be submitted once these cases are finalized. JAWS Compliant: The RRA01 form is JAWS (Job Access with Speech) compliant, making it accessible to blind and visually impaired users. JAWS allows these users to read the screen using text-to-speech output or a refreshable Braille display, ensuring the RRA01 form on eFiling is fully accessible. Conclusion: The RRA01 form provides a valuable tool for taxpayers to correct certain errors in tax assessments without navigating the formal objection and appeal channels. By utilizing this form, taxpayers can address straightforward mistakes efficiently, ensuring that their tax affairs are accurate and up-to-date while minimizing the administrative burden on both themselves and SARS. However, it is crucial to understand the limitations and requirements associated with this process to ensure that the RRA01 is used appropriately. If you’ve identified an error in your tax assessment, don’t delay—utilize the RRA01 form for a quick and efficient correction process. Visit SARS eFiling today to submit your request and ensure your assessments are accurate. For guidance on completing the RRA01 form, or if you’re unsure whether your error qualifies, contact us for expert assistance.
What does finalised with changes from SARS mean?
What does finalised with changes from SARS mean? A SARS “Verification Finalised with Changes” letter typically means that SARS has completed the verification process of your tax return and found discrepancies or issues that required adjustments. Here’s a breakdown of what this could mean for you: Verification Process Complete: SARS has reviewed the information and documentation you submitted to verify the accuracy of your tax return. Changes Made: During this review, SARS identified errors, omissions, or discrepancies in your return. They have made adjustments to correct these issues. Impact on Tax Liability: The changes may affect your tax liability or reduce your refund. This means you might owe additional taxes, be entitled to a refund, or have a change in the amount of the refund you were expecting. Next Steps: The letter should outline the specific changes made and any actions you need to take. This might include paying additional taxes, receiving a refund, or providing further documentation. Appeal Process: If you disagree with the changes, the letter will usually provide information on how to dispute the findings or request a review. What does finalised without changes mean from SARS? A SARS “Verification Finalised without Changes” letter typically means that SARS has completed the verification process of your tax return and found no discrepancies or issues that required adjustments. In other words, this means all went well and SARS is happy with the documents you submitted. if you have a refund due, it should be processed within 72 hours. Sometimes, it takes up to 10 business days for it to reflect in your account What to expect when verification is completed: You will receive a completion letter notifying you of the verification outcome. If all goes well, this letter will normally notify you that no adjustments have been made. In that case, SARS will not be making adjustments to their assessments. If you are due for a refund, it should be paid out in 10 working days (provided you have no tax debt due or outstanding tax returns from prior years). If you were the one owing SARS, the amount due will remain payable. What does a completion letter from SARS mean? This means that SARS has completed the verification process and is happy with the supporting documents you have provided them with. If you have a refund it should be processed within 72 hours or 10 business days. You will need to ensure that your bank details are correct and updated for the refund to be processed without delay. You can contact us for: Tax submission Help with Objection to assessments Help with the interpretation of your assessment Help with the interpretation of your statement of account Tax return submission (corrections or new submissions) Leave a message/get a quote Subscribe now:
Should I Submit a Tax Return in 2024? Essential Tips for All South Africans
Should I Submit a Tax Return in 2024? In this article, we look at whether you should submit a tax return. At the end of the article, we will post a form that can assist you in deciding whether you need to submit a tax return. Not everyone should submit a tax return. Here are some guidelines: Who should not submit a tax return: A natural person or a deceased estate is not required to submit a return if their gross income consists solely of one or more of the following: Remuneration (other than retirement lumpsum) not exceeding R500 000 and this is from a single source and where PAYE has already been deducted Interest income from a South African Source (not including Interest from Tax-Free Investment vehicles) and this interest does not exceed: R23 800 for a person younger than 65 years 34 500 for a person who is 65 years or older or 23 800 for a deceased estate Tax-exempt dividends where the individual was a non-resident throughout the year of assessment; Amounts received or accrued from tax-free investments; and A lump sum received from a retirement fund with tax deducted according to a tax directive. Non-residents are required to submit a tax return if: The non-resident carried on a trade (business) in South Africa The non-resident disposed of an asset in respect of which the Eith Schedule applies The non resident’s gross income included interest from a source in the Republic to which provisions of section 10(1)(h) of the income tax Act doe snot apply The above scenarios do not apply where: You are paid or granted certain allowances relating to business travel, accommodation or subsistence You are granted table benefits or advantages derived by reason of employment or the holding of any office You received or accrued any amount in respect of services rendered outside South Africa. Commonly asked questions: What do I need to know concerning the 2024 tax season We have created a guide for you here. Am I supposed to submit a tax return? You need to submit a tax return if you meet specific criteria such as earning above a certain threshold, having multiple sources of income, or wanting to claim tax refunds and rebates. Criteria include: Earning above the tax threshold. Having more than one employer or income source. Earning rental income, capital gains, or foreign income. Wanting to claim deductions for medical expenses, retirement annuities, or other tax credits? Do I need to file a tax return with SARS? If you meet the criteria above. Filing a tax return ensures that you comply with tax laws, potentially receive refunds, and accurately report all sources of income to SARS. Why is it important to submit tax returns? Submitting your tax returns is crucial for several reasons: Compliance with legal obligations. To claim refunds or rebates due to overpaid taxes. Avoiding penalties and interest charges for non-submission. Ensuring accurate records with SARS, which can be beneficial for future financial planning. Ensuring you have a complete record of filing tax returns and avoiding penalties for non-submission of tax returns What happens if you don’t submit a tax return in South Africa? Not submitting a tax return can lead to: Penalties for late submission or non-submission. Interest charges on unpaid taxes. Possible legal action by SARS. Missed opportunities for tax refunds or rebates. How much tax will I pay if I earn R6000? If you earn R6000 per month (R72,000 per year), you are below the tax threshold and typically will not pay income tax. For the 2023/2024 tax year, the tax threshold for individuals below age 65 is R95,750 per annum. What does IRP5 mean? An IRP5 is a tax certificate issued by employers to employees. It details the income earned and taxes deducted during the tax year, which is necessary for filing your tax return. Where do I get my IRP5? Your employer should provide your IRP5. It can also be accessed on your eFiling profile if your employer has uploaded it to SARS. But, it is important to request it from your employer as it forms part of supporting documents for your tax return. When can I submit my SARS tax return in 2024? The 2024 tax season opens on July 15, 2024. Auto assessment will start on 1 July 2024. How to reduce taxes in South Africa? You can reduce your taxes by claiming allowable deductions such as: Medical aid contributions and expenses. Retirement annuity contributions. Donations to registered charities. Home office expenses. Tax-free savings accounts. Ensuring all allowable business expenses are claimed if you are self-employed. Keeping detailed records and documentation to support your claims. You can read more about basic tax deductions here What if I am aggrieved by SARS? Review the Assessment: Carefully examine the assessment details and gather all supporting documentation. Request Reasons (Optional): Seek detailed reasons from SARS within 30 days of receiving the assessment to understand its basis, if unclear. File an Objection: Submit a formal objection, including necessary documents and legal arguments, within 80 business days of the assessment date or the date SARS issues the reasons. Appeal: If dissatisfied with the objection outcome, lodge an appeal within 30 business days of the notice. This may involve Alternative Dispute Resolution proceedings if elected. Still unsure if you need to submit a tax return? Click here to find out if you should file a tax return. How can we assist you? We can help you with: Filing a tax return and tax return preparation Interpretation SARS missed assessments Filing an objection Tax planning and advisory Bookkeeping and accounting Payroll services VAT registration VAT return preparation and submission Tax training and workshops Retirement and estate planning Leave a message/get a quote Subscribe now:
What should you know about Auto Assessment?
What should you know about Auto Assessment? What is an auto-assessment? An auto-assessment is an automatic assessment issued on taxpayers by SARS. This basically means that SARS has collected taxpayer information from their parties (such as medical aid or retirement annuities) and then use this information to file your return and issue an assessment on this return automatically without your involvement. How will you know if you are auto-assessed? You should receive an email or SMS from SARS informing you that you have been selected for auto-assessment. The process started in July 2022. But, this is not the first time SARS has issued an auto-assessment. They also issued these in the 2021 tax year. What should I do if I receive an auto-assessment? SARS says if you agree with the aut0-assessment, you do not have to do anything. However, should you be in disagreement, you have just 40 working days from the date of assessment to file a correction (edited tax return.) What happens if you miss the 40 days? If you do not do anything, SARS assumes you are in agreement with the auto-assessment. The assessment becomes your final assessment at the expiration of the 40 business days. Can I request an extension? If you feel the 40 working days are too little, you can request an extension on eFiling before the 40 days have expired. SARS will require “reasonable” grounds for the request. if you miss the deadline, you will have an additional 21 working days to submit a request for an extension on the same terms. If both 21 and 40 days have passed and you still were not able to submit a correction, you will need to provide “exceptional circumstances” to justify a delayed request for extension. NOW TO THE BIG QUESTION, SHOULD I ACCEPT THE AUTO-ASSESSMENT? We think this is a risky move if (and SARS may not pick up these things on an auto-assessment:) 1. You have qualifying donations you would like to claim 2. You have qualifying out-of-pocket medical aid expenses 3. Your medical aid is being paid for by someone who is not the principal member (normally the person paying for the medical aid would be the one to claim the medical tax credits.) 4. You have capital gains on assets that you sold that fall outside the scope of an auto assessment 5. You are a crypto or share trader 6. You have a side business or rental income (profit or loss) 7. You have and qualify for a home office expense claim (deductions) 8. You would like to claim your business travel kilometres 9. SARS missed one or some of your retirement annuity funds Contact us: Was this helpful? Would you like us to do your tax return? Get in touch with us: 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
What if there is no response from SARS?
What if there is no response from SARS? KEY TAKEAWAY POINTS: SARS has 21 business days to complete a verification They may finalise it with or without changes If they take more than 21 business days, you have a right to lodge a complaint If nothing happens, you may take the matter up with the office of the tax ombud Remember to keep a proper track record of the matter and/or any follow-ups you make on the matter In this article, we discuss what verification is, what to do when you are selected for verification and if SARS does not bother to get back to you on time. INTRODUCTION: SARS has capacity issues that they are working hard to resolve, But, it seems this 2021 tax season they took more than what they can handle. We have observed many taxpayers who have been selected for verification but who have not heard back from SARS many days after the verification was initiated. Under normal circumstances, SARS has up to 21 working days to finalise a verification and issue a finalisation letter and/or final or adjusted assessment. In one case we have looked at, for example, the taxpayer who was selected for verification on 29 July 2021 has not heard back from SARS even at the time of writing this article. We are certain, she is not alone in this. Let’s look at some important definitions before we can consider what one must do if SARS takes their time on the verifications. What is verification? Being selected for an audit and verification are two different processes. With a verification, SARS is doing a face value verification of the information declared by the taxpayer on the declaration or in a return. This involves the comparison of the information on the return against the financial and accounting records and/or other supporting documents. All this is to ensure that the declaration/return is a fair and accurate representation of the taxpayer’s tax position. (Remember, in terms of the Tax Administration Act, the onus is on the taxpayer to provide supporting documentation to prove that the deductions and information on their declaration are reasonable, fair and accurate.) Who can be selected for verification? Any taxpayers can be selected for a verification process for the proper administration of tax. The selection can also be done on a risk basis. What should you do if you are selected for verification? What should you do if I am selected for verification? SARS will notify the taxpayer if they have selected them for verification. The letter issued will state what the taxpayer must do or provide to SARS. The letter will also notify the taxpayer to check their tax return and to make any corrections if there are any discrepancies on their tax return. The taxpayer will be given 21 business days from the date of the letter in which to provide the supporting documents and schedules. These documents and schedules can be submitted via eFiling or SARS support documents portals. During the verification, you can expect to get another letter requesting additional information if the relevant material initially supplied was not sufficient to finalize the verification. If you are due for a refund, you may not get this until the verification process is finalised. What happens if you do not respond to the verification? It is always important to keep an eye out for SARS correspondences on your email or eFiling. Normally SARS sends you a message and email when they have issued important notices. If you choose not to respond SARS may: Issue a second letter reminding you to submit relevant information Issue a final request for relevant information If you still do not respond, a SARS official will contact you telephonically and request that you submit the necessary relevant material within 5 business days. Should you still not respond, SARS may raise an assessment based on information readily available or obtain from a third party. Now let’s consider what your options are if SARS ghosts you. What if you have complied/responded but SARS takes all the time in the world on the verification? There is the office of the tax ombud that can help with operational issues. But, it does not get involved before you have exhausted all internal SARS complaints mechanisms. You can only go directly to the office of the tax ombud only if there are compelling reasons to do so. So, the first step to take is to complain to the SARS complaints office. To do so, you must be sure that the matter is now outside the normal service period, as in the example we have earlier about the taxpayer who was selected for verification on 20 July and has not yet back from SARS ever since. There are three ways through which one can complain about SARS: Via eFiling. See the step-by-step guide on how to complain about eFiling. Please note that you have to be registered on eFiling to be able to do this. You may not download or print the form to send it by any other means. You must also have a valid case number to which your complaint relates. By visiting the branch. If you do, you may need to ensure that you have spoken to all relevant higher people before you leave the branch. Due to COVID, you may need to make an online appointment. By calling the SARS Complaints Management Office (CMO) on 0860 12 12 16. Do not call the call normal call centre and say you are following up on an unresolved matter, the call centre agents may “escalate” your case and normally that achieves very little. If your complaint is not resolved after 21 working days, you may take the matter to the office of the tax ombud. Here are a few tips on winning the battle against SARS poor service/administrative issues and making sure you have a winnable case when you approach them or the Tax Ombud: Be
Credit notes under scrutiny, are you complying?
What we have seen now is increased scrutiny of credit notes for compliance with the VAT Act. The main challenge is that in most instances accounting packages being used by businesses do not contain all the information required on a credit note by the VAT Act. It is therefore important that businesses and accountants ensure that credit notes comply with the Act before they are issued and before VAT claims are submitted. Otherwise, it will be difficult for businesses to get back their legitimate VAT claims. Key elements that must be found on the credit note are the following: Vendor details (names and addresses, VAT registration numbers for both the issuing and receiving party) The words “credit note” must be clearly stated on the document being issued A brief description of the circumstances that gave rise to the credit note. Now this one is critical and what you may find is that some accounting systems do not allow for this. We would encourage you to add this narration to the description part of the credit note. Information sufficient to identify the original transaction to which the credit note relates, that is the original invoice that is being credited. In other words, if someone else who is not familiar with your records comes to check the credit notes, they should be able to trace its origins with ease. It would also be very important to make sure that the correct VAT rate is applied. If the original invoice was issued before the VAT rate changes to 15%, then the credit note should also be at 14%. One cannot claim back more than what they declared. In more detail and in terms of Section 21(3), of the VAT Act, a credit note must contain the following particulars: (i) The words “credit note” in a prominent place; (ii) the name, address and VAT registration number of the vendor; (iii) the name, address of the recipient. And where the recipient is a registered vendor, the VAT registration number of the recipient; (iv) the date on which the credit note was issued; (v) either— (aa) the amount by which the value of the said supply shown on the tax invoice has been reduced and the amount of the excess tax; or (bb) where the tax charged in respect of the supply is calculated by applying the tax fraction to the consideration, the amount by which the consideration has been reduced and either the amount of the excess tax or a statement that the reduction includes an amount of tax and the rate of the tax included; (vi) a brief explanation of the circumstances giving rise to the issuing of the credit note; (vii) information sufficient to identify the transaction to which the credit note refers; (b) the actual tax charged in respect of the supply concerned exceeds the tax shown on the tax invoice as charged, the supplier shall provide the recipient with a debit note, containing the following particulars: (i) The words “debit note” in a prominent place; (ii) the name, address and VAT registration number of the vendor; (iii) the name, address and, where the recipient is a registered vendor, the VAT registration number of the recipient, except where the debit note relates to a supply of goods in respect of which a tax invoice contemplated in section 20 (5) was issued; (iv) the date on which the debit note was issued; (v) either— (aa) the amount by which the value of the said supply shown on the tax invoice has been increased and the amount of the additional tax; or (bb) where the tax charged in respect of the supply is calculated by applying the tax fraction to the consideration, the amount by which the consideration has been increased and either the amount of the additional tax or a statement that the increase includes an amount of tax and the rate of the tax included; (vi) a brief explanation of the circumstances giving rise to the issuing of the debit note; (vii) information sufficient to identify the transaction to which the debit note refers: Provided that— (A) it shall not be lawful to issue more than one credit note or debit note for the amount of the excess; (B) if any registered vendor claims to have lost the original credit note or debit note, the supplier or recipient, as the case may be, may provide a copy clearly marked “copy”; (C) a supplier shall not be required to provide a recipient with a credit note contemplated in paragraph (a) of this subsection in any case where and to the extent that the amount of the excess referred to in that paragraph arises as a result of the recipient taking up a prompt payment discount offered by the supplier if the terms of the prompt payment discount offer are clearly stated on the face of the tax invoice. Did you just get VAT registered and you need someone to configure your accounting system for VAT? Leave a message Subscribe now:
How to hold SARS accountable
How to hold SARS accountable The office of the Tax Ombud was established to act as a bridging gap between SARS and the taxpayer. But, taxpayers do not always have a direct line to connect with the Tax Ombud. A taxpayer may lodge a complaint with the Tax Ombud after they have exhausted all the SARS complaints mechanisms, unless there are compelling circumstances for not doing so. There are three ways through which one can lodge a complaint with SARS: Via eFiling. See the step-by-step guide on how to lodge a complaint via eFiling. Please note that you have to be registered on eFiling to be able to do this. You may not download or print the form to send it by any other means. By visiting the branch. If you do, you may need to ensure that you have spoken to all relevant higher people before you leave the branch By calling the SARS Complaints Management office (CMO) on 0860 12 12 16. Here are a few tips on winning the battle against SARS poor service/administrative issues and making sure you have a winnable case when you approach them or the Tax Ombud: Be specific: If you have a complaint, it is better to call the Complaints Management Office (CMO.) If you call SARS contact centre to get a reference number, specify that it is a complaint with a complaint, specify that it is a complaint and not a follow-up. If you keep calling the call centre and saying you are following up, it may remain just that, a follow-up. You need to specify that you have a complaint so that it is treated as one. Some complaints will need case numbers, make sure you call the contact centre to get one. Try again: Sometimes, a complaint lodged on eFiling may be rejected for one reason or the other. If you feel you have a compelling case, pick up the phone and call the CMO so that they may record and lodge the complaints on your behalf. You may also call them if you are not sure how the process works on eFiling or if you are too far from a SARS office. For example, I once lodged a complaint about a delayed refund (because refunds should be paid 7 workings days after verification or audit is finalised) but the system kicked me out and rejected my complaint. The complaint was successfully lodged after calling the CMO. Build a compelling case: The most important thing to do when dealing with SARS is to build a good case, this is whether you are raising a complaint, an appeal or an objection. You will need a system to record your interactions with SARS (at each touchpoint with them). You also need to store documents and supporting documents relevant to the taxpayer’s case. The system of recording your interactions with SARS should allow you to build a timeline of how the case is developed and to ensure that you have all the documents you need for this case. One such system is to make sure each client file/folder contains relevant subfolders that will help you gather the important and necessary information. The other is to build a dashboard that records the timeline and communications with SARS. This can take any form, for example, Word or Google docs, a task management tool like Asana, Trello or Monday.com. NB: You do not do this because something has gone wrong, but because things may go wrong and often they do go wrong. The advantage of doing things this way is that you will save yourself a lot of time when doing the actual complaint, even an appeal or objection. The Tax Ombud form will ask you to summary your case in chronological order. So, if you had been building a case over time, this process will be a breeze. You have all the facts and timeline at your fingertips. Are you frustrated with the way SARS has handled your affairs? How can we help you? Leave a message Subscribe now:
How to avoid or reduce the risk of a SARS audit
How to avoid or reduce the risk of a SARS audit By now we all know that SARS is looking to raise more tax revenue to make up for revenue collection shortfalls. This means SARS may and will do all they can to increase revenue collections. It will not be surprising to find that SARS audit teams will target taxpayers in order to raise additional income. Besides, their systems are designed to pick up “discrepancies” on a taxpayers’ return and these can easily trigger an audit. So do not be surprised if, a few days after submitting, you get a notification from SARS saying you’ve been selected to submit your supporting documentation for inspection or even that you have been selected for a full audit. At Eva Financial Solutions, we have a team of dedicated and diligent tax practitioners working around the clock to ensure that you do not pay a single cent more that what you should legally pay over to SARS. We have designed our internal processes, checks and balances to ensure that, even if the audit comes, our clients can avoid an audit or the process goes smoothly without causing them unnecessary emotional stress. Here are a few tips: Always ensure that your tax affairs are up to date and that you have filed all tax returns as they fall due. SARS has now made it easy to check your tax compliance status online. You should always check that your tax status is green (compliant). Once you have picked up that you are not compliant seek to address the issues sooner rather than later or consult your tax practitioner for help. You should always come clean with the taxman before being audited. Once the audit has started, you are prevented from claiming the relief under section 227 of the TAA for coming clean. Before you submit your return, ensure that you have all supporting documents for every income and deductions on your return. If you kept a personal data room, by the time your return is due you would have gathered all the necessary supporting documents for your tax return (Medical aid, Travel logbooks, Interest and Dividends certificates etc.). Be warned, do not convince yourself that if you ignore SARS’ requests for documents long enough, it will just go away. Always have your house in order. If you own and run a business as a sole proprietor or have a rental property, ensure that you do not include and deduct your personal expenses. Chances are that an ordinary taxpayer will struggle to interpret various tax laws or will misinterpret certain SARS requests or requirements. Therefore, always use the services of a reputable tax practitioner or accounting firm. Eva Financial Solutions can assist you in this regard, contact them if you cannot get your own personal tax practitioner. After submitting your return log into (or at least ask your tax practitioner to do so) SARS at least a few more time to check if SARS hasn’t issued any sneaky notifications that require your attention. If your email address and not that of your tax practitioner is linked to your profile, alert your tax practitioner if and when you receive any kind of notification from SARS. When it comes to VAT, these tips might be helpful: When you get VAT registered ensure that you have sent your VAT number to all your suppliers so that they may update their databases and add your VAT numbers onto your invoices. Insist on getting a valid tax invoice from all your suppliers. When you receive a tax invoice, check that it meets all the requirements of a valid tax invoice Check that the new VAT rate of 15%, and that the total price (including VAT) is correctly calculated before accepting the invoice/quote. Before you submit your VAT return: Check that you have claimed only where you are supposed to claim VAT (for example, you may not claim on motor car (passenger vehicle) rental or entertainment expenses as defined and other zero-rated or tax-exempt supplies. Check that you have applied the correct tax types/rates to each transaction, for example, Zero-rated sales cannot be classified as tax-exempt. Ensure that each tax type is correctly populated on the VAT201 return. Check that you have declared all standard rated sales (Sales VAT at 15%) that you should have declared and have done so using the correct VAT tax rate. Perform turnover VAT reconciliation at each VAT return submission. This will always ensure that your income statement turnover matches your VAT return submission. This will also reduce the risk of an IT14SD and the time it may have to take you if you did this only because SARS asked you to do an IT14SD. Remember, SARS systems are designed to pick up discrepancies between your VAT return submissions and your annual income tax return turnover. Before you hit submit, ensure that the VAT201 is correctly populated and the amounts contained are correct and matches your now correct VAT reports. Remember, once submitted you can only increase not reduce the amount payable. Take care that cash register slips and tax invoices issued from 1 April 2018 reflect the correct VAT rate. This will generally be 15% unless a specific time of supply rule or a rate specific rule applies. VAT vendors issuing debit or credit notes from 1 April 2018 must ascertain that the correct VAT rate is reflected and applied when determining the VAT amount. Debit or credit notes will generally reflect the old VAT rate of 14% where it relates to supplies of goods or services before 1 April 2018, subject to certain exceptions. Similarly, debit or credit notes relating to supplies made after 1 April 2018 must reflect the new rate of 15%. If your accounting systems allow, ensure that you immediately lock the submitted periods so that no further changes are effected to a closed VAT period. Ask a question or leave a message for us below: Leave a message Subscribe now:
Owing SARS, what are your options?
If you follow our posts, you will have come across one of my articles that dealt with the approach SARS has taken to deal with the non-submission of a tax return. This is a follow-up to this article. So now you read that SARS will prosecute you for non-submission and charge you an R5 600 fine if convicted (of course, you will be convicted because there is overwhelming evidence against you/your company that you did not submit a few tax/vat returns.) You then went on to submit all your outstanding returns but you now owe SARS large sums of money. Taxpayers are required to be fully compliant in all their tax matters by submitting and paying their taxes on time. If taxpayers are not compliant or have outstanding tax debt the SARS Debt Management Department is committed to assisting businesses and individuals to become fully compliant. There are a few avenues that SARS uses to assist in this regard. How much do I owe? If you are not 100% certain how much you owe SARS, you will need to contact their call centre to enquire about your outstanding balances. If you stay not far away from a SARS branch, a visit to the SARS branch would not kill you. When you visit, just ensure you have all your particulars with you to avoid being turned away. Lastly, if you were registered for e-filing, run a statement of account to see how much you owe SARS. Your next step is to make the outstanding payment to SARS. Contact SARS or your tax practitioner to help you load a payment that can then be released from your bank account. What if I can’t pay the outstanding amount now? Every taxpayer must be aware that it is best practice to always file a tax return on time in order to avoid penalties and interest. But, if you are currently unable to pay your taxes, please contact SARS without delay. The following options may be available to you: Payment arrangements: Under certain circumstances, SARS can reach an agreement with a taxpayer to defer a tax debt for later payment or for payment by instalments. A deferred payment arrangement is s when a taxpayer can not settle the full amount owing to SARS immediately and want to apply for a payment plan to settle the debt. Under this option: SARS has the option to decline the request. Interest will accrue on any unpaid debt. If you don’t adhere to the conditions of the payment arrangement the payment agreement will be terminated and normal collection proceedings will resume. The taxpayer must suffer from a deficiency of assets or liquidity, which is reasonably certain to be remedied in the future. Notwithstanding this deficiency, the taxpayer must anticipate that there will be income or other receipts which can be used to satisfy the tax debt. At the time of concluding the agreement, the prospects of collecting the tax debt must be poor or uneconomical, but likely to improve in the future. Moreover, the deferral should not prejudice the collection of the tax debt 2. Compromise agreement: In certain circumstances, a compromise may be requested on taxpayers’ outstanding tax debt. A SARS Debt Compromise is a process whereby a taxpayer requests that SARS permanently “write off” a large portion of their debt, with the balance being paid in full by the taxpayer immediately on the condition that the taxpayer complies with any conditions as may be imposed by SARS. A compromise cannot be considered if the taxpayer disputes the debt. Therefore while a matter is under objection or appeal, a compromise cannot be considered. If the taxpayer wants to compromise he has to withdraw his objection or appeal. What if you do not agree with the debt? If you are not in agreement with your tax debt, you may lodge a dispute. To lodge a dispute please go to objections and appeals. Even though you are disputing the tax debt you remain under obligation to pay the debt whilst your dispute is being handled. Why you should consult Eva Financial Solutions if you need a debt arrangement or compromise We deliver on our promise Compromise solutions are difficult to obtain For this reason, it is important that it is handled by qualified and dedicated tax practitioners. We have a team of experts who will always work to get the best result. Leave a message Subscribe now: