These are the six steps a SARS auditor will follow when he examines your fixed assets
SARS will often choose targets for audits at random. This means you can't prevent it, so it's better to be prepared, just in case.
Part of preparing is understanding the process an auditor follows. This way, you can stop the SARS auditor from getting out of hand.
To help you understand this process, we're revealing the six steps an auditor will take to examine your fixed assets...
Every SARS auditor will follow these six steps to examine your fixed assets
Step #1: The auditor will check of when you got an asset. He'll look at the purchase price, date of acquisition, delivery notes, etc. He can also ask to inspect the physical asset to prove it exists.
Step #2: He'll check if you use the asset for the purpose of trade (this is important when it comes to your wear and tear allowance).
Step #3: He'll check your wear and tear allowance rate.
Step #4: He'll check if you documented the sale of assets and investigate any assets you sold to employees for fringe benefit purposes.
Step #5: He'll check your scrapping allowance to ensure you recouped the correct amount. He'll recalculate it and correct it if he needs to.
Step #6: He'll investigate if your company's lease agreement is in your company's name. He'll check if there are initial payments in the agreement that count as lease premiums.
During these checks the auditor will also look at any Vat implications when it comes to the sale or disposal of your assets.
As long as you're always honest on your tax returns and keep your records up-to-date, you won't need to fear the SARS audit.
Just remember your rights
and ensure the auditor doesn't get out of line.
PS. Are you ready for your SARS tax audit?