Proof of documents on a SARS Income Tax Audit destroyed in a fire. Is there any reference of the prose if documents were destroyed in a fire?
Important:
This answer is based on tax law year ending 28 February 2017.
Answer:
The relevant law is found in sections 1, 29 and 46 of the Tax Administration Act. As defined in section 1, relevant material means any information, document or thing that in the opinion of SARS is foreseeably relevant for the administration of a tax Act as referred to in section 3. SARS is then entitled to call for the information under section 46 of the Act.
It is section 29 of the Tax Administration Act that requires of the person (taxpayer) to keep records that will enable the person to observe the requirements of a tax Act and enable SARS to be satisfied that the person has observed these requirements. Section 30 explains the form in which the records are to be kept if there are documents.
The Act doesn’t deal with what is necessary to prove this – in other words, how these documents should look and what it should contain. It may therefore be possible to use other documents to prove this.
The Act also doesn’t deal with the instance where the documents are not available due to circumstances beyond the control of the taxpayer. It allows for an estimated assessment to be made – see section 95. It is not a compromise but may have the same result.
We suggest that the matter is explained to the SARS auditor to hear their view on the matter.