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Revealed: Two functions your company records must fulfill

by , 23 January 2014
One tiny error in your company records could make you liable for severe Vat penalties and interest from SARS. Since that's a risk you can't afford to take, continue reading as we outline the two functions your company records must fulfill.

You need to be even more cautious about the records you keep now that the Tax Admin Act (TAA) is in effect.

According to the Practical Vat Loose Leaf Service, you must keep records that:

  • Allow you to obey the law;
  • Are specifically required under the Vat Act; and
  • Satisfy SARS that you've observed the record requirements.

Your company records must assist SARS auditors with the following two functions…

When you're deciding which records to keep, they must serve a defined purpose and assist SARS auditors with the following two functions:

  1. Establishing the nature, time and value of all taxable supplies relating to your business; and
  2. Reconciling your accounting records with the Vat returns you submitted.

Not sure which records to keep?

Here's a checklist to help you determine the types of records to keep

  • Physical books;
  • Paper-based source documents;
  • Electronic records;
  • Details of your accounting system like charts and codes; or

Remember, your records must be available for inspection by SARS for up to five years and you must keep them in a format that's easy to access. This means they must be open and available for SARS if they come knocking!

The bottom line: You have a duty to keep your company records. Record-keeping is the most important aspect of your Vat management strategy as your records are the proof you need to substantiate your claims and returns to SARS.

So make sure your records fulfill the two functions we've mentioned.

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