Avoid financial suicide
Don't make one of these five tax mistakes. Read this report now
In this article, we gave you reasons why SARS does a Capital Reconciliation and how this process affects you.
Now, we're going to tell you about three additional things you need to keep in mind when it comes to a Capital Reconciliation.
Three things you need to know about Capital Reconciliation
#1: According to the Practical Tax Loose Leaf Service, if you submit your return without your asset and liability statements, SARS will send it back to you to complete.
The bad thing about this is, when you resubmit, it might be late and you might incur penalties (this applies to old and manually-submitted returns). These can include penalties for non-compliance, administrative or even late payment. SARS might even add on interest as well.
#2: Don't undervalue/estimate your assets, especially in the first year you submit a statement of your assets and liabilities to SARS.
Some taxpayers do this to hide their assets from SARS. This is a big mistake as it can cause unexplained increases in your capital in later years.
#3: SARS has access to third party information.
This doesn't only include vehicle registries, deeds offices and bank accounts, but also your debtors, creditors and family members.
The taxman also has the cooperation of many foreign tax agencies, and can get relevant information from them as well.
The point here is: Be honest when it comes to your financial affairs. SARS has extensive powers and it'll catch you out if you do anything unlawful.
Now that you know what to keep in mind regarding a Capital Reconciliation, be sure to check out this article as well.
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