With the advent of e-filing services, the arduous task of filing taxes has been dramatically simplified for South Africans. But the need to keep your paperwork house in order is even more important than ever, as should you be required to produce documentation to support your claims made on the e-filing system, you would have to do so at the drop of a hat.
“Traditionally, as South Africans, we used to be very good administrators, but with the introduction of technology based systems many people have become lax and are guilty, at times, of not filing personal records properly resulting in proof being misplaced or in the case of electronic records simply deleting them from email,” says Richard Buttle, chief financial officer of Metrofile.
Individuals will have to, like their business counterparts, get used to the need to keep their proof of income and deductions for the periods stipulated by SARS, Buttle therefore urges all South Africans to make sure they keep adequate records and more specifically proof of their expenses, as there is always the likelihood that they could be audited and if unable to provide proof they will be required to pay more taxes, penalties and interest. Filing your tax return is simply not the end of the story, SARS do have powers to audit past returns and to claw back taxes should you not be able to prove the deductions you have claimed.
The simple answer is to create a record keeping system at home or work. Ideally you should keep all records for the relevant tax year together with a copy of your return, that way if you are audited or if SARS do request evidence from you it will not only be easy to find, but enable you to respond to queries from SARS more appropriately.
Information that needs to be kept includes payslips, medical aid tax certificates, insurance policies, investments, capital gains and losses, and any other information you may have supporting income or deductions. Retrieving these from a service provider two or three years later can often prove problematic and may result in your being unable to meet the time frames SARS allow for the submission of evidence.
“We often get requests from bank’s that store their records with Metrofile to retrieve a statement for a company or an individual for a particular month and because their records are stored in a systematic way, we are able to do this with ease. However it would be so much easier and less costly for individuals if they kept their paperwork in order,” he adds.
With another year of tax filing just about behind us, valuable lessons can be learnt from good administration. So, while you might be tempted to keep all your eggs in one basket, be sure that your physical records are safely filed away and that any electronic records are backed up.