Your Tax Deadlines for September 2023
- 7 September – Monthly Pay-As-You-Earn (PAYE) submissions and payments
- 28 September – Excise Duty payments
- 29 September – End of the 2nd Financial Quarter, Value-Added Tax (VAT) electronic submissions and payments, CIT Provisional payments where applicable.
Corporate Taxpayers: Hello Tougher SARS Verifications
“Any taxpayer can be selected by SARS for verification for the purpose of proper administration of tax, including on a risk basis.” (SARS)
Companies must, within 12 months of their financial year-end, submit to SARS an Income Tax Return for Companies (ITR14), as well as supporting documents, declaring their full income tax responsibility to SARS. This declaration, return and supporting documents may be selected for verification by SARS.
A verification involves the comparison of the information declared on the return to the taxpayer’s financial and accounting records and other supporting documents. The purpose of a verification is to ensure that a declaration or return represents a taxpayer’s tax position fairly and accurately.
Previously, when companies were identified for a verification, SARS required them to submit the Supplementary Declaration for Companies or Close Corporations or IT14SD form. This is no longer required by SARS, but it will increase the scrutiny companies face when selected for verification.
What has changed?
The requirement to submit an IT14SD in a verification case is replaced by a letter requesting specific relevant documents based on the reason for verification.
SARS also says that as of September last year, companies are no longer required to submit any outstanding IT14SDs and that should taxpayers receive any further notification or final demand letter to submit an IT14SD, such request should be ignored. However, taxpayers should always check with their accountant before disregarding correspondence of any kind from SARS.
What’s still the same?
- The requirement to submit relevant documents upon submission of the ITR14.
- All correspondence will still be issued as before.
- The process of dealing with the verification case will remain the same.
- The submission of specific relevant documents will be required during the verification process.
- The verification of a company always requires the submission of a signed set of Annual Financial Statements (AFS), as well as a detailed Tax Computation and the underlying supporting documentation/schedules (e.g. Tax pack).
- When requested to submit specific relevant documents based on the reason for the verification, companies are still required to submit the documents within 21 working days.
How does this affect your company?
When a company is now identified for verification, it will be notified of the verification, as is the current practice and will be requested to:
- Submit specific relevant documents based on the reason for the verification, or
- Submit a revised Corporate Income Tax ITR14 return.
To comply with a request to submit specific relevant documents, the requested documents must be uploaded using eFiling, or any other submission channel, including SARS Online Query system (SOQS).
Once the relevant documents are uploaded, a SARS verifier will be able to action the case. If the relevant documents are deemed insufficient, or additional documents are required, this will be requested. The relevant documents must still be provided within 21 working days. If a company does not comply with the request for relevant documents, SARS will raise a revised assessment to resolve the verification case, and will add back the related expenses, dependent on the specific relevant documents requested.
Companies can comply with a request to submit a revised Corporate Income Tax ITR14 return through a request for correction (RFC). Companies have the option of submitting one correction, which may or may not resolve the verification. However, the revised ITR14 will also be subjected to a risk evaluation.
Seek professional assistance
Being selected for a verification entails significant risk to any business. In addition to the time, cost and effort to collate the information, documents and clarifications required, the taxpayer could still be referred for audit as part of the SARS compliance process, even if the verification process has been completed.
Whether submitting a Corporate Income Tax ITR14 return or facing a SARS verification with a request to submit documents or to file a correction, you would be well-advised to rely on the expertise of your accountant to ensure compliance.
Common Tax-Related Criminal Offences, and How to Avoid Them…
“The difference between tax avoidance and tax evasion is the thickness of a prison wall.” (Denis Healey, former British prime minister)
Section 234 in Chapter 17 of the Tax Administration Act (TAA) sets out a list of criminal tax offences. If prosecuted and convicted of a tax criminal offence, taxpayers will – at the least – be subjected to a substantial fine and may even face the maximum penalty of imprisonment for up to two years. There are also other harsh consequences of a criminal conviction under section 234, such as a negative impact on the eligibility of individuals to hold certain positions and to emigrate from South Africa, as well as reputational damage and a loss of both shareholder value and stakeholder trust for corporate taxpayers.
These tax criminal offences range from serious offences, such as intentional tax evasion and frustrating SARS in carrying out its duties, to relatively minor breaches, such as failing to notify SARS of a change in registered particulars.
Common tax criminal offences
- Not registering for tax purposes to evade paying taxes due.
- Not submitting returns to SARS as and when required to evade paying taxes.
- Not truthfully responding to SARS’ questions.
- Not declaring income to evade paying tax on that income.
- Lying about expenses, like business mileage or medical contributions, to reduce tax payable or obtain an undue refund.
- Submitting fraudulent invoices to reduce Income Tax and VAT payable or obtain fraudulent refunds.
- Employers deducting tax from employees (PAYE) and never paying it over to SARS.
- Vendors, whether registered for VAT or not, charging VAT and never paying it over to SARS.
- Not notifying SARS of a change in registered particulars.
- Not retaining records as required under the TAA.
- Issuing an erroneous, incomplete or false document required to be issued under a tax Act.
- Neglecting to disclose to SARS any material facts which should have been disclosed.
- Obstructing SARS officials in doing their duties.
How SARS views taxpayer behaviour
While taxpayers were previously merely penalised for human errors and simple mistakes – which are common given the complex tax processes and strict deadlines – a taxpayer can now be found guilty of an offence without SARS having to show that the taxpayer wilfully, deliberately and knowingly committed the offence.
This means even inadvertent or administrative errors can be penalised with a maximum penalty and that a substantially expanded range of taxpayer behaviours – and a greater number of taxpayers – are now open to criminal sanctions.
How to avoid committing tax criminal offences
SARS notes that among the steps that a reasonable person may take to avoid committing tax criminal offences is “employing an accountant, tax practitioner, or other tax professional to complete returns, or from whom to obtain advice before completing a return with entries that are not understood or adopting a position with tax implications.”
Be sure to choose a specialist who is appropriately qualified and experienced, as well as a member of a professional controlling body that enforces strict standards, such as SAICA (South African Institute of Chartered Accountants).
Advice from a professional can ensure that an appropriate tax strategy is formulated to proactively manage tax risk in the long term, which will save time and money and avoid expensive tax mistakes while keeping in line with the ever-changing tax obligations.
