Now and again, SARS will ask you to provide a statement of your assets and liabilities in a process called Capital Reconciliation.
It can be a very daunting process, and so here are the 9 steps SARS follows in the process.
Take note of each step and prepare yourself accordingly...
SARS tries to gain your trust and co-operation without letting you know the purpose of certain queries.
They also does certain procedures secretly before confronting you before confronting you with their findings.
SARS will first determine your capital balance at the current year-end as well as at the selected prior year-end.
The difference between the two years' capital balances represents capital growth or reduction.
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SARS will ask you to certify the details you provide in your statements of assets and liabilities, or to provide signed annual financial statements for your company or close corporation.
They can also get third-party information to test your values.
SARS can't force you to sign a document confirming the details on your statements of assets and liabilities, so don't!
Also, if you're unsure of a value and are making an estimate, then clearly make this known.
SARS can then test the reliability of your statements.
If they don't trust you, they can verify certain figures by:
· Making registration inquiries at the municipality or vehicle registration authorities;
· Looking for title-deeds at the Registrar of deeds; and
· Inspecting bank statements.
They can also request any information from third parties you've done business with, as well as contact foreign tax agencies and gather information that is relevant to their evaluation.
Do you want to learn what the other 5 points are? Then page over to chapter C08: Capital Reconciliation in your Practical Tax Loose Leaf Service handbook.
If you don't already have this invaluable resource, then click here now to get your hands on it.