Legal Advice

Working with SARS

Throughout its lifetime, every business will work with SARS.

First, ensure that your business is registered with SARS. When you register your business with CIPC, your business will automatically be registered as a taxpayer with SARS. In other instances, registration with SARS can be done online or via post. Upon registering with SARS, your business will obtain a tax reference number which is important for filing tax returns and making payments to SARS. 

Once you are registered, you must submit annual tax returns via e-filing. File your business’ tax returns before the annual due date published by SARS. Failure to do so may result in financial penalties and interest charges.

Various taxes will likely be relevant to your business, including:
  • Corporate Income Tax or Turnover Tax;
  • Value Added Tax;
  • Capital Gains Tax;
  • Dividends Tax;
  • Donations Tax; and
  • With respect to your employees, PAYE, UIF and the Skills Development Levy.

Businesses are obligated to make various tax payments monthly, quarterly, or annually. Tax payments are calculated based on your business’ income and expenses. SARS provides thresholds for different tax payments which may also depend on the sector in which your business operates. It is your business’ duty to stay up to date and comply with changes to tax laws and thresholds.

Even when you submit your tax returns as usual, SARS may require further information from your business from time to time. Note that your business is compelled to respond to SARS’s enquiries accurately, honestly, and timeously.

In addition, your business is obligated to keep accurate financial records. Financial records can be used to prepare tax returns and to demonstrate compliance with the law. These records should also be made available to SARS upon request. Retain invoices, proof of payment, bank statements, and any other relevant documents recording your income and expenses. Other documents to keep include accounting records and financial statements. You can digitalise this to make your record-keeping easier and more secure.
Consequences of non-compliance with tax legislation include:
  • Fines;
  • Confiscation of property;
  • Business failure; and
  • Imprisonment.

There is no reason not to be compliant. However, businesses that are non-compliant with their tax obligations can apply to SARS via the voluntary disclosure program (VDP) to obtain relief. This relief is available for taxpayers that have a pending audit or investigation that has not been completed.

SARS also has a detailed dispute process. You have the rights to object to assessments, decisions, administrative non-compliance penalties, or interest imposed by SARS. If you are not satisfied with the outcome of your objection, you are entitled to appeal the decision. Objections and appeals must be submitted at your nearest SARS Branch or by email to [email protected]. In your appeal documents, you may agree with SARS to refer the appeal for resolution by Alternative Dispute Resolution. Disputes may also come before the Tax Board or a Tax Court.

For more information, SARS' website is accessible at https://www.sars.gov.za/ and includes a wealth of advice and knowledge on the various taxes that will apply to your business.

Working with Accountants

Working with accountants can assist your business to ensure compliance with the legal taxation framework. Accountants can promote transparency and business integrity,  
Businesses can employ in-house accountants. These accountants can provide accounting expertise on a daily basis. This is important for regular checks and balances. For example, an in-house accountant can prepare financial statements for the business review month-to-month or every quarter.
Businesses can also outsource accountants. For example, a business can outsource accountants from an accounting firm. This can be helpful in saving the business costs and time on training, recruitment, and employee turnover. Outsourcing accountants can also assist businesses to acquire professional and expert services without any bias. 
Appoint an accountant, registered tax practitioner, or an auditor registered with SAICA or SAIPA, to assist you with your business’ tax requirements. To protect your business, ensure that your accountant is registered with, and accountable to, a body like SAICA or SAIPA and that you have a services agreements with clear and measurable Key Performance Indicators (KPIs).
Always remember that what your accountant does remains your responsibility, even if they are outsourced, so verify all work done. You will be pursued by SARS if, for example, you accountant fails to submit tax returns on your business’ behalf or PAYE for your employees. 
Nevertheless, accountants are at the centre of bookkeeping as they are responsible for preparing financial statements, such as income statements, balance sheets, and cash flow statements. They also provide services such as costing, managing finances, providing financial advice, doing financial calculations, assessing business performance, analysing business ratios, and budgeting. 
It is therefore advisable that businesses work with an accountant to acquire accurate financial records. An accountant does not only to save time, money, and stress but also helps to make sound financial decisions.