Taxpayers! If you are an individual tax payer in South Africa, you are:
1. Among the highest individual tax payers in THE WORLD.
2. Probably giving up MORE THAN HALF of your monthly salary to the taxman.
3. One of 5.7 million people that are PAYING for a population of 50 MILLION!
STOP handing money over to SARS today!
SAVE on tax when you do your tax return – you only need to do 6 things
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Here's why you don't want SARS to select you for verification
A verification is basically an inspection of your taxes (chapter 5 of the Tax Administration Act (TAA)
). It's similar to an audit – just a scaled back version. But you should treat it with the same caution as a full audit.
Millions of taxpayers will submit their tax return and expect a refund. Especially those who don't have their medical aids structured into their salaries, others with retirement annuity contributions, or even some with travel allowances their deductions will more than cover.
They'll receive notification SARS is conducting a verification of their tax return.
The problem with verification is the rules that apply to it, are the same as those that apply to an audit.
The timelines are the same, although we know verifications are generally finalised faster than audits (because there's much less work to do). But there's still a timeline. And this means a delay in refunds. Section 190(2) specifically empowers SARS to withhold all refunds until such time as any inspection, verification or audit is finalised.
Making sure everything on your (or your client's) tax return is accurate and correct is important to reduce the risk of being selected for verification.
If your client's expecting a refund, I'd make sure to tell him that SARS has increased the frequency of subjecting taxpayers to verification.
Last year, almost half of all my clients (companies and individuals) were subject to a verification or audit! And each and every one of them had to wait until this was finalised before they could get their money refunded to them.
Read on for SARS turnaround time and what you can do to speed things up.
Negotiating your way through the tax laws and never-ending tax changes is a minefield!
The 442 pages of the Tax Act. The 48 page tax amendment bill. The 13 different types of taxes. The constant deadlines. Your monthly, quarterly and annual tax obligations. The threats of 200% in penalties.
It doesn't stop!
But, today, I'm going to introduce you to the best kept 'secret weapon' in the market.
How to get tax-free dividends
How to erase one payroll headache from their lives
Whether they should use company cars or travel allowances to save taxes
17 Important tax updates and changes
How to find out if they qualify for a 98% tax saving and how to take advantage of it if they do
How to turn an assessed tax loss into a profit
How standing up to SARS can actually save money and how to do it without getting into trouble
How to avoid R3.6 million in penalties by avoiding this common mistake
SARS can take up to one year to refund you
At least you can inform clients about an expected turnaround time though, right?
Well, not really – unless you say they can expect their refund back with the next… 12 months. An entire year!
That's the word from SARS, the general 'turnaround goal', if you will.
Nothing in the tax legislation holds SARS to a turnaround time for verification and audits. It can take up to an entire year to finalise this process. And this is only because that's the instruction given to their auditors.
Delaying audits, with no real counter available to taxpayers is yet another means SARS will use to keep money in the government's bank account.
In fact, SARS only has to let you know what's happening with a verification or audit once every 90 days (Public Notice 788).
So what can an individual or business taxpayer do if they're anxiously awaiting a refund, and SARS is dragging its feet with the verification or audit?
Five steps to take when SARS is dragging its feet with your refund
Submit all your supporting documentation as soon as possible!
One week later, phone in to SARS and get confirmation that the auditor doesn't require anything further from you.
As a tax practitioner, submit a letter to SARS on behalf of your client, requesting SARS to pay the refund, before the verification is finalised (if you're certain there won't be any adjustments by SARS). This is in terms of Section 190(3). But the taxpayer will need to offer SARS some form of security for the refund (you know, just in case).
If clients are still waiting for their refund 30 days after submitting the supporting documentation, then contact SARS call centre.
Don't accept a SARS call centre agent telling you, 'sorry, the auditor is still busy and you'll have to wait for finalisation'
30 days after you've submitted everything.
Report the matter to the SARS Service Monitoring Office (SSMO). In my experience, the SSMO is an outstanding department. I've always received fantastic service and better than expected turnaround times from them on reported matters. In fact, I've not even had to proceed to the tax ombudsman after the SSMO, that's how good they've been!
Make sure your clients are aware of this, and the possibilities of the ridiculous actually coming to pass. Imagine you survive a six month verification, and then SARS refers you for a full audit… for another 12 months! It can happen.
There's one last obstacle after SARS finalises a verification and audit that SARS could put between you and your refund. Anyone care to guess?
I'm sure the vast majority of readers have had this experience. Your banking details have been the same for the past nine million years. But the one year you get a refund, SARS suddenly suffers from digital amnesia and their systems can't compute your banking details.
SARS tells you the only way to fix this is to personally go into a SARS branch with a million pieces of paper (all originals please), during office hours (hope you have some leave saved up), to stand in a queue and hopefully be allowed to update your banking details. And no, you can't send your tax practitioner.
You'd think with all the RICA details and the fact SARS can take money OUT of your bank account, it could help a taxpayer out and confirm banking details directly with the banks. But no, that would make refunds happen much faster. And that's not one of SARS' strategies!
Be prepared for slow refunds this year. Good luck to all during filing season, and if you're due a refund - my sympathies.
P.S. To always be kept up-to-date on tax deadlines, change in tax legislation, latest tax news and tax savings, simply join the Tax Watch community.