Understanding Record-Keeping Requirements for Individual Tax Returns in South Africa

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Written By Pumeza Chochoe

Proper record-keeping is essential for accurate tax reporting and compliance with the Tax Administration Act and other relevant tax laws in South Africa.

Maintaining accurate and complete records is crucial for a few reasons:

  • It substantiates the information reported in your tax returns.

  • It enables you to respond effectively to any queries or audits from SARS.

  • It provides a clear financial history, which is beneficial for personal financial management and planning.

Duration for Keeping Records according to SARS

The length of time you need to retain your records depends on your specific circumstances:

  • If you have submitted a tax return and the return has not been audited by SARS, you must keep the relevant records for five years from the date of submission.

  • If you are required to submit a return but have not done so, you must keep the records indefinitely until the return is submitted.

  • If you are not required to submit a return but have received income, incurred a capital gain or loss, or engaged in any other taxable activity, you must keep the records for five years or until the audit is concluded, whichever occurs first.

  • If you have lodged an objection or appeal against an assessment or decision, you must keep the records for five years or until the disputed assessment or decision becomes final, whichever occurs first.

  • If you have been notified or are aware that the records are subject to an audit or investigation, you must keep the records until the audit or investigation is concluded.

Records must be kept in their original form, organised, and stored safely. They should be readily available for inspection, audit, or investigation by SARS. You may also keep them electronically, provided it meets the Commissioner's requirements.

Can You Keep Records Electronically?

Yes, you can keep your records electronically. This can be a convenient and efficient way to manage your documents, if the electronic records are kept in a manner that meets the requirements set by the Commissioner.

Ensure that your electronic records are organised, secure, and easily accessible for any potential audits or investigations. This means that The electronic records must be in a format that SARS can readily access, read, and correctly analyse.

If the documents were created on an accounting system i.e. Xero, you must have documentation that describes how transactions are created, processed, and stored.

This includes manuals for the software and hardware used, as well as procedures to prevent unauthorised deletion, alteration, or destruction of records.

The electronic records must satisfy the standards of integrity outlined in the Electronic Communications and Transactions Act (ECTA). This means the records should be secure and protected from tampering

Backup and Storage

Measures must be in place to ensure the adequate storage of electronic records, including backups and the storage of all electronic signatures, log-in codes, keys, passwords, or certificates required to access the records.

Using the excuse ‘my laptop was stolen or broken’ is not acceptable to SARS and won’t be recognised as an appropriate defence for their loss. Use either external storage, cloud storage or ideally both!

You can read more about it here.

Proper record-keeping is not only a legal requirement but also a best practice for managing your financial affairs. By following these guidelines, you can ensure compliance with SARS and avoid potential issues during audits or investigations.

If you have any questions or need assistance with your record-keeping, please do not hesitate to contact us.

Enkosi Kakhulu!