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Don't know how SARS will tax you on a certain transaction? Apply for an Advanced Tax Ruling in ten steps!

by , 13 July 2015
So you want to import an asset from England. It's in bits and pieces, and similar to the type of stock you manufacture. You'll assemble it on arrival.

But you're unsure if SARS will treat it as a capital asset or as trading stock?

You can apply for Advanced Tax Ruling (ATR) if there's no tax law in place for the transaction you have in mind. Or if you're not sure about how SARS will treat a transaction for tax purposes. An ATR will give you clarity on how you can proceed.

So apply for an ATR to avoid any serious or nasty surprises when SARS taxes you in an unexpected way. Just follow these ten easy steps.

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Are you ready for your SARS tax audit? How to deal with your 'unwelcome' guests

After receiving hundreds of questions about audits from business people just like you, the team at FSP Business has compiled a resource that'll make sure the SARS auditors are out of your hair as soon as possible.

This essential resource gives you everything you need to adequately and efficiently prepare for an audit once you've received the dreaded notification.

To read on for more click here

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10 Steps to apply for an ATR

Let's look at each step in detail.

Step #1 - Register on eFiling
 
Submit your ATR application through the ATR Service Portal on the SARS eFiling website.
 

Step #2 - Complete the application form and the pre-screening checklist
 
The pre-screening checklist help's you see if your application is subject to a mandatory or discretionary exclusion.
 

Step #3 - Complete your details
 
Fill in your details, like:
  • Your contact details, such as: your address, telephone number etc.;
  • If you're filling the application in your individual capacity or a representative capacity;
  • The type of tax your application relates to; and
  • The issue areas raised in your application.

Make sure you don't have any tax skeletons in your closet BEFORE you apply. You must give consent to the publication of the ruling. SARS publishes the rulings on its website.
 

Step #4 - Pay the fee
 
If your application passes the pre-screening process, SARS will assign it to an ATR staff member.
 
They'll review the application and ensure it's not subject to a mandatory or discretionary exclusion.
 
They'll check if you've paid the application fee of R14 000, or R2 500 for SMMEs, in full. Or SARS will reject your application.  
 

Step #5 - Receive a confirmation and a reference number
 
SARS will allocate your application to a ruling specialist in the ATR unit. He'll be responsible for the review and process your application.
 
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The key to reducing how much tax you pay is staying off SARS' radar.
 
If you're not compliant, your chances of an audit this year has just doubled, and you will pay more in penalties.
 
But I have a perfectly legal way for you to reduce your risk. Click here for more.

 
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Step #6 - Supply SARS with relevant supporting documents
 
Submit all supporting documents relevant to the application to SARS via eFiling. Do this within five days of submitting your application. Your ruling specialist needs these documents to process your application.
 
If you don't, SARS will reject your application and it won't refund your application fee.
 

Step #7 - Review of application
 
Once SARS receives all the supporting documents and submissions, it will assign your application to a ruling specialist. The ruling specialist will check everything's in order.


Step #8- Get feedback from the ruling specialist
 
You'll know after five days if your application is accepted or rejected. Your ruling specialist will give you the cost-recovery fee they'll charge for your application.
 

Step #9 - Accept and pay the estimated cost recovery fee
 
How does SARS calculate the cost recovery fee? This fee depends on the number of hours it takes the ATR unit to answer the issues in your application. Plus any other direct costs SARS incurs, like the cost of travel if one of the ATR specialists needs to visit your premises.
 
Accept the estimated fee – and pay 20% of the fee in advance – before SARS starts with your ruling.
 

Step #10 - Sign the letter of engagement
 
SARS won't work on your ruling until you sign the letter of engagement. It outlines the basic rights, obligations, terms and conditions for your application and ruling process. It serves as a binding contract between you and the Commissioner.
 
You can monitor your status by logging into SARS eFiling.

For more detailed information on each of these steps turn to the Advanced Tax Ruling in the Practical Tax Loose Leaf. Don't have yours yet? Get your copy now.
 
P.S. Do you know there are 12 taxable fringe benefits - are you taking advantage of all of them? Truth is there are hundreds of companies out there that don't know which fringe benefits are taxable or they land up taxing the wrong percentage on them... Click here to find out more.

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