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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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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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.
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