Jean du Toit | Attorney | Tax Consulting SA | mail me |
Too often, taxpayers seem to forget that the most important aspect of dealing with SARS is to ensure that they can discharge their burden of proof. As a taxpayer, it is on you to provide SARS with the relevant material that, on a balance of probabilities, supports your position.
Taxpayers are required to retain relevant records, books of account and documents for a period of five years. It is important to note that such supporting materials must be kept in the prescribed form and manner.
Specific requirements apply where these materials are kept in electronic format, as prescribed by the Commissioner for SARS in a public notice.
SARS recently published a draft Public Notice wherein they propose that certain changes be made to these requirements. Taxpayers must understand these changes, as well as the general requirements that apply to electronic record keeping.
Acceptable electronic form
The electronic records must be kept in an ‘acceptable electronic form’. This means a form in which the integrity of the electronic record satisfies the standard contained in section 14 of the Electronic Communications and Transactions Act (ECTA), and that may be accessed by SARS for purposes of performing their administrative duties under the Act.
In addition, to be in an ‘acceptable electronic form’, the person required to keep the records must be able to, within a reasonable period when required by SARS, either:
- provide an electronic copy of the records in a format that SARS can readily access, read and correctly analyse; or
- send the records in an electronic form that is readily accessible by SARS; or
- provide SARS with a paper copy of the records.
The draft Public Notice proposes that sending the records in an electronic form or providing to SARS a paper copy thereof be removed. Rather, the only manner to provide to SARS the electronic records, when requested to do so, will be to provide an electronic copy thereof to SARS in a format that is readily accessible, readable, and correctly analysable.
It is proposed that when providing the electronic copy, the person will also have to provide the following:
- database records on delimited, Microsoft Excel or similar format; and
- records that substantiate database records, such as supplier invoices, purchase orders, bank statements, in portable document or similar format.
Location of records
Electronic records must be kept and maintained at a place physically located in South Africa. However, a senior SARS official may authorise a person to keep the electronic records at a location outside South Africa if they are satisfied that the person complies with further conditions.
The draft Public Notice proposes that if a person wants to keep the electronic records outside South Africa they will now have to sign and submit a declaration to SARS via email.
In addition, in the case of a person who is not a South African resident but is liable to register for VAT under section 23(1A) of the Value Added Tax Act, No. 89 of 1991, the natural person responsible for their VAT affairs must also sign and submit such declaration.
Save for the above two proposed changes, the remainder of the electronic record keeping requirements will remain the same.
It is encouraging to see that SARS is once again on par with technological developments, thereby ensuring that they can effectively execute their mandate in an everchanging environment.
