When can business expenses be deducted for an individual if additional income is earned over salary?
July 31, 2018

SARS verifications, audits – when, why and what to do

Being selected for an audit and being selected for verification are two different processes.

Verification:

Once you have submitted your return, it could be selected for verification.

A verification involves a comparison of the information per your return against the financial records and other supporting documents to ensure that the information completed on the return is correct.

When a taxpayer is selected for a verification, it is very important that your supporting documents are submitted timeously; failing which, SARS will disallow any credits or deductions that you have claimed in your return.

Common examples of supporting documents for individual, salaried taxpayers are: medical aid certificates, travel logbooks and retirement annuity contribution certificates.

We as your tax practitioner have access to your eFiling profile and usually submit the requested documents on your behalf.

Once you have submitted all the requested relevant material, the verification should be finalised within 30 to 60 business days.

Once the verification is finalised, one of the following can be expected:

Notification of the finalisation of the verification Where no further risks were identified and no finding was made
Notice of assessment of the revised assessment Where no further risks were identified but a finding was made
Referral for audit letter Where further risks were identified

If you have a refund due, the refund will not be paid out while the verification is in progress.

Audit:

An audit is an examination of the financial records and supporting documents of the taxpayer to determine whether the taxpayer has correctly declared his/her tax position to SARS. SARS will generally ask questions relating to, for example, your rental property that forms part of your tax return. You will need to explain your circumstances to SARS and back up all your expense claims with invoices.

Any taxpayer can be selected by SARS for an audit on a random or cyclical basis.

It is, therefore, preferable to have all your invoices and supporting documents readily available before filing your return in case SARS selects your return for an audit.

The required relevant material will differ depending on the tax type and scope of the audit. SARS can also obtain relevant material from any third party.

If all supporting documents are valid and you can correctly answer SARS’ questions, there should be nothing to worry about if you are selected for an audit.

Once you have submitted all the requested relevant material, the audit should be finalised within 90 business days.

If you have a refund due, the refund will only be paid out after the audit has been finalised.

We invite you to contact our Tax Department should you have any further inquiries regarding a verification or audit of your income tax returns. You can contact us at 021 840 1600 or tax@asl.co.za.