Mthobisi Nozulela|Published
South Africans have been warned that even a simple transfer between their own bank accounts could trigger questions from the South African Revenue Service (SARS).
Lambert Roberts, Expatriate Tax Team Manager at Tax Consulting SA, said taxpayers could face an estimated tax assessment if they fail to explain deposits reflected in their bank statements or provide the supporting documents requested by SARS before the deadline.
These deposits may include transfers between personal accounts, loans, money received from a spouse or proceeds from the sale of personal belongings.
"Money paid into an account may be a loan, a transfer between your own accounts, money received from a spouse, an inheritance or proceeds from selling a personal item. A bank credit is not automatically taxable income. But if you cannot document its source and nature when SARS asks, you may have to spend time and money proving that it was not income," Roberts said.
He added that "transfers between accounts can be particularly easy to misread. If money leaves one account and appears in another, SARS may see a credit in the receiving account without an obvious link to the outgoing payment".
Keep proof of where your money came from
Roberts said taxpayers should keep bank statements for both accounts and match transfers by date, amount and payment reference to show that the money was moved between their own accounts.
Loans, payments from a spouse and proceeds from selling personal belongings should also be supported by documents explaining the source and nature of the funds.
Under section 46 of the Tax Administration Act, SARS can request relevant information and documents to verify a tax return.
Roberts warned that taxpayers who fail to respond to more than one request for relevant material could face an estimated assessment under section 95(1)(c) of the Act.
Such an assessment is based on the information available to SARS and may not reflect the taxpayer’s actual tax position. Taxpayers can request a revision by submitting a true and complete return or the relevant material within 40 business days, subject to applicable rules.
He urged taxpayers to meet SARS deadlines, answer every question and provide a clear reconciliation of deposits with supporting evidence.
"If one question is missed or an explanation is unsupported, SARS may regard the response as inadequate and continue its verification or issue an estimated assessment when the legal requirements are met".
IOL Business