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Four steps SARS auditors will use to assess your company's dividend tax compliance

by , 07 August 2014
Preparing for an audit is the best way to ensure in goes well when it does happen. I say 'when' it happens because your chances of escaping the SARS audit net are slim to nonexistent.

To know what you must do and have when SARS audits you, you must know what a SARS auditor will look for.

To help you in your preparations we're explaining the four steps the SARS auditor will take when he assesses your dividend tax compliance...


These are the four steps a SARS auditor will take to assess your compliance with dividend tax rules

Step #1: He'll ask you for copies of the minutes from your directors' meetings. He'll use these records to determine the date you declared your dividend. He'll assess the date you received the dividend and if it came from a related entity that elected not to pay dividend tax.
Step #2: He'll verify the details of the person who received the dividend (your shareholder or members).
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Steps #3: He'll investigate any of your transactions that he believes are dividends. For example, he'll investigate any payments you made to a recipient to confirm whether or not it's a dividend.
Step #4: He'll investigate if you paid your dividend tax liability in the correct period.
To ensure all records relating to you dividend tax are correct, remember that it replaced Secondary Tax on Companies (STC). But you can still use any STC credits you already have. Make sure you treat these correctly when you calculate your dividend tax and don't forget to declare a dividend even if your company has a STC credit.
This way you can ensure your tax is correct and the SARS auditor won't find any inaccuracies in your records. 
PS. The best way to survive an audit is to avoid costly tax issues from the start.

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