As FastJet airline can tell you, a tax audit is no joke. The amount of tax FastJet has to pay Tanzanian authorities almost doubled when interest and fines were added to the outstanding taxes. Here in South Africa, it's no longer a question of whether or not a business will be subject to an on-site tax audit; it's a matter of when. If your business is facing a tax audit, there are seven 'tax traps' you need to avoid to make sure you steer clear of hefty penalties and interest.
FastJet has to pay Tanzanian authorities over £1 million for not paying property taxes and airport departure charges for close to a year.
As if that's not enough, this amount almost doubled when interests and fines were added in a tax audit
, Fin24 reports
And it's not just a problem in the UK.
Here at home, Julius Malema can no longer afford to pay his bodyguards, says The Daily Maverick
That's because Malema could owe SARS
up to R16 million, writes MoneyWeb
But it's businesses that are the hardest hit when SARS
does a tax audit
It's easier for SARS
to collect unpaid taxes
from employers than employees.
If your business is facing a tax audit,
there are seven tax traps
you'll need to steer clear of to avoid hefty penalties and interest now that SARS
has intensified its tax audit regulations
, FSP Business
Seven tax traps to avoid as they'll lead to huge penalties from SARS if you're under tax audit
Tax Trap #1 – Hidden assets that you haven't included as 'assets and liabilities' in your tax return.
Tax Trap #2 – Hidden interest you've received on investments and not included when completing your tax return.
Tax Trap #3 – Troublesome lease agreements
Tax Trap #4 – Faulty invoices
Tax Trap #5 – Calculating your provisional taxes incorrectly
Tax Trap #6 – Not declaring fringe benefits such as a car and a house.
Tax Trap #7 – The wrath of disgruntled ex-employees who know the status of your finances.
If you're facing a tax audit,
you'd better make sure you've steered clear of these tax traps
. If you've already fallen into one, own up by explaining the situation to SARS
– it's better than claiming innocence and facing hefty penalties when the truth comes out.
For more information on tax audits, get your hands on the Practical Tax Loose Leaf
. We've got a dedicated chapter on Tax audits in the Practical Tax Loose Leaf,
in it you'll discover:
6 Objectives SARS must meet
Are you at risk of an audit?
4 Types of SARS audits
What documentation will SARS request in an audit?
6 Things to remember when it comes to a SARS audit
Get the Practical Tax Loose Leaf here!