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Audits: even the most hardened and meticulous taxpayers find them terrifying … what happens when you’re neither hardened nor meticulous?
Imagine you step into a dark and mysterious forest; you don’t know what lurks behind the trees. This is how a taxpayer may feel when summoned for a SARS audit. While audits are here to ensure compliance and accuracy, the process can be unnerving and daunting – even for the bravest souls.
From auto assessments to “bad auras”
November last year, Cameron Drysdale – Western Cape Regional Manager – started warning us about SARS’s auto assessments and shifting landscape: SARS’s primary goal is “to enforce compliance”. Just one example: it’s homing in on “people who have extra properties but are not declaring rental income.”
Do you need a refresher on some of these latest trends and how they impact you? Read our blog on SARS’s current offensive strategy. Need a reminder on why it’s crucial your rental income is factored into your tax submission? Read last month’s blog.
Even if you don’t make a high income, or have a complicated tax submission, you might still be forced to navigate the auditing forest. Find out why. And how to come out of it unscathed.
SARS has started “expanding specialised audit and investigation skills and establishing another specialised audit unit for investigations into the tax affairs of high net worth individuals with highly complex financial structures”. The outcome? “[I]n-depth lifestyle audits”, says
Who gets audited?
The following situations can make you an automatic target:
SARS:
- wants to check your entire sector because other players have been found guilty of certain offences (the audacity!)
- doesn’t trust the information you submitted. Remember: software that is not updated regularly can misplace one figure – changing your results drastically. (PS Accounting software must be updated when legislation changes; this simple oversight can spawn nasty forest trolls)
- is double-checking your handsome refund
- receives a tax-crime report on you or your business
- doesn’t like how many adjustments you’ve made on your tax return
- is suspicious of how your tax return this season is very different to previous ones
And sometimes it’s just plain random! (Read more here.)
Verification versus audit
An audit can be preceded by a verification – even a successful one. Verifications are often daunting, time-consuming, and stressful. But audits are even worse.
“By its nature, an audit is a more intrusive process than a verification and the scope could be extensive. The audit could be completed within anything from 30 business days to 12 months, or even longer, depending on the complexity of the matter, the volumes of transactions involved and the level of co-operation by the taxpayer.”–SARS (read its outline of the difference between a verification and an audit).
You’re in the auditing forest… now what?
When facing an audit, honesty and transparency are your automatic allies. Cooperate with the auditors, answer their queries promptly, and keep records of all conversations. One of the most crucial aspects of surviving a SARS audit is maintaining meticulous records. Keep in mind: SARS may impose strict deadlines for submitting the documents and information they’ve asked of you. So be as prompt and as well informed on what’s needed as possible!
Remember, you can be the author of your own story, if you stay calm, remain truthful and have a forest-guide who knows which traps to avoid.
Survive unscathed; Contact us today!
PS This was written by a human. Rest assured, the tax consultant you work with will be one, too.
PPS Is a fellow taxpayer stuck in the auditing forest? Share this article with them: