Being audited by SARS? Don’t panic! Here’s what you need to know

– Chanel Raath (Director of Cornerstone Tax and Accounting Services)

You’ve done your civil duty and submitted your tax return correctly and in time and just as you sit back and wait for your much-anticipated tax refund – you get slapped with a SARS audit. The panic sets in and you start wondering what on earth you did wrong…

Relax. Although it can be inconvenient, a SARS audit isn’t nearly as scary or problematic as many people might think. At Cornerstone Tax and Accounting Services, we believe in sharing our decades of in-depth experience with our clients to give them piece of mind, knowing that all their tax and accounting needs are taken care of and to empower and prepare them for obstacles along the road.  With this ethos in mind, here are some facts about SARS audits that will come in handy if you or someone you know has been selected for an audit.

There is a difference between being verified and being audited

  • What is a SARS verification?

Verification is a face-value comparison between the amount shown in your ITR12 (your tax refund) and the documents that are used to determine this amount. In other words, a SARS verification checks if the amounts showed in your ITR12, match the amounts shown on your payslips, medical aid certificates, donations receipts etc. This is done mainly to ensure that the refund you receive is accurate and fair.

  • What is a SARS audit?

SARS defines an audit as an examination of the financial and accounting records and/or the supporting documents that you have submitted to determine whether you have correctly declared your tax position to SARS. To put it in layman’s terms: it’s to make sure that you are being truthful about your income and that any and all document you have submitted (payslips, Section 18 certificates etc.) are real and not forged or tampered with.

Audits are selected randomly and doesn’t necessarily mean you have done something wrong

Many people believe that being selected for an audit automatically means that they did something wrong or have been charged with a criminal activity, which is not the case at all. The truth is that SARS can randomly select any tax payer for an audit. Think of it as spot checks to ensure that your documents, information and income and tax paid are all correct and in the right place.

If you have been selected for an audit, you will be notified by SARS and they will advise on what the next steps will be. In many cases, you may have to submit additional documents or SARS will come and do a field audit. It’s advisable that you cooperate in a timeous manner to the best of your ability and do not ignore notifications or requests from SARS.

A dedicated SARS official’s contact details will be on the notification letter, so you can also phone them if you have any questions or concerns. Or, if you were smart enough to appoint a registered tax practitioner, they will be able to all the hard work for you. Click here to learn more about Cornerstone Tax and Accounting Services.

Be patient, it’s going to be a long wait

If you were selected for an audit, don’t expect it to be over in a flash. A SARS audit can take up to 90 business days to complete form the date all the necessary documents were received, assuming there are no other issues along the road.

Unfortunately, this means that your tax refund can be severely delayed as a result, because any refunds due to you will only be paid out once the audit has been finalised. SARS is considered one of the most efficient tax agencies in the world and will endeavour to finalise all audits and verifications as swiftly as possible, however it relies on your patience and cooperation to do so.

If you are still unsure why you were selected for an audit or if you have any questions regarding your personal or business tax and accounting, contact Cornerstone Tax and Accounting today to learn more about our bespoke and expert services.

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This article was adapted from “What if I’m audited or selected for verification?” published by SARS, last updated on 21 August 2019. The original article can be found by clicking here.

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