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Six record keeping tips to claim tax deductions and avoid paying SARS penalties

by , 24 November 2016
Six record keeping tips to claim tax deductions and avoid paying SARS penaltiesSARS wins lots of disputes because taxpayers don't keep accurate records or the correct records.

Keep reading for six record keeping tips you can use to claim deductions and avoid paying penalties.

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You can lose a dispute with SARS because of inaccurate record keeping
 

Make sure this never happens to you!

Here╩╝s everything you need to know about successful record keeping according to the new Tax Admin Act.

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Six record keeping tips to claim tax deductions and avoid paying SARS penalties
 
Tip #1 – Keep all invoices
 
All invoices issued to you can reduce your tax bill. If you misplace invoices, such as petrol slips, entertainment, etc. you'll pay more tax than you legally have to. You can only claim deductions if you have valid proof of your deductions. 
 
Tip #2 – Keep a record of every expense

Keep a record of every expense, even if you're not sure it's tax deductible. Make sure you claim ALL deductions you're entitled to. Without invoices you'll easily overlook certain expenses you've incurred.

Read on for the next two tips.



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How to make yourself invisible to SARS

The key to reducing how much tax you pay is staying off SARS' radar.

SARS has conducted R1.8 million audits. They've added 100s of new tax collectors and auditors to their payroll and each one has his own collection targets to meet.

This means two things:
  1. If you're not compliant, your chances of an audit this year have just doubled, and
  2. You will pay more in penalties.
But there are 139 perfectly legal ways for you to make yourself invisible to SARS. Here's how…

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Tip #3 – Keep proof of additional income received
 
If you've received income that isn't taxable, e.g. loans, incidental gambling winnings, etc. SARS will try and tax all income you receive if you don't have proof of where the income came from. This proof will help you identify the source of receipt.
 
Tip #4 – Keep proof of payment for salaries and wages
 
Establish the amounts you pay towards salaries or wages. Keep proof of wage registers, proof of payment, proof of employment, copies of identity documents of casual employees, acknowledgement of receipt of wages and amounts paid. If you keep all of these you can claim all amounts paid for salaries and wages, especially casual wages and wages paid in cash.

Read on for the last two tips.


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Tip #5 – Make sure you can prove deductions you've claimed
 
Make sure you can explain the amounts you declare in your tax returns. SARS will question the accuracy of your declarations if you can't support them with evidence. If you can't prove any deductions you've claimed, SARS will question the validity of all your claims.

 
Tip #6 – Make SARS your best friend
 
Maintain good relationships with SARS. Make sure you're in a position to prove your declarations. This will help improve your relationships with SARS. This will also lead to mutual trust, limit unnecessary queries and save time performing audits.
 
The Practical Tax Handbook shows you how to store your records electronically, so you never have to worry about losing any paperwork.

There are 15 records you must keep to avoid penalties. Find out what they are here...



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