I have a client who is an advocate, who wants me to compile his financial statements and then submit his tax returns to SARS. But the client does not have invoices. He only has a bank statement showing his receipts and expenditures? And again, he is using
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. 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. Section 30 explains the form in which the records are to be kept if there are documents.
If the taxpayer refuses to provide the information the comment by Judge Smith, in SARS v Brown is relevant. The Judge said that “(a)ll that SARS is required to show is that the information sought is “relevant material” necessary for the administration of a tax Act.” Because SARS asked for it, we can accept they consider it relevant.
The position is that SARS can ask for more than the bank statements. This is very probable and particularly relevant in this instance because you mentioned that the bank account is also used for the payment of personal expenses.
The documents are even more important when the taxpayer is a vendor, but it is not relevant to your request.