Financial records are an indispensable part of any business because they prove the cash flow to auditors. And the VAT Act clearly states that you need to keep financial records for at least five years in case SARS wants to audit you, failure of which will result in heavy penalties!
So to help you ensure legal compliance, and avoid any unnecessary penalties from coming your way, here are the 16 financial records you must keep on you for when SARS wants to audit your business...
If you claim input tax, your SARS VAT audit is impending
And when the SARS auditor comes knocking or sends a query, he'll check if:
· Your books and records comply with the requirements of Section 55 of the VAT Act;
· You didn't claim on exempt supplies;
· Any of your claims were for non-taxable supplies;
· You apportioned inputs correctly and at the right tax rate (Sections 16, 17 and 20
of the VAT Act);
· And more!
But the truth is, even if you're entitled to your claim, but don't have the valid documentation, he'll still reverse your deduction!
Here's everything you need to secure every input tax claim you submit.
The 16 financial records you must keep on you for when SARS wants to audit you are…
All books of account;
Bank deposit slips;
Creditors' lists; and
Keep reading to get a useful tip…
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You must keep the originals of all your financial records.
For example, this is usually the original hard copy invoice you received or the paper printout, if it was emailed to you.
You can also apply to SARS to let you keep microfilm copies, computer tape records or CDs instead of paper-based documents. But if you want to use paper-based documents, they have to be in the original format.
Any photocopies must be clearly marked with 'photocopy'.
Record keeping is the most important aspect of your VAT management strategy, because they are proof of your claims and returns to SARS. So ensure you keep all of the required financial records on you for at least five years, and ensure that they are in a proper format.
To learn more, page over to Chapter R 04: Record Keeping
in your Practical VAT Loose Leaf Service
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