Following ongoing engagements with controlling bodies and other stakeholders, SARS has decided to decommission the IT14SD and issued a public media statement on 30 August 2022 confirming that with effect from 30 August 2022 no further IT14SD are required to be submitted.
What does this mean for taxpayer’s who are, have been and may be selected for SARS verifications going forward?
The requirements to submit IT14SDs will now be replaced by a directed request for specific documentation leading to the reasoning behind the SARS verification using a risk-based approach.
What does the information above mean?
Its imply means that with the decommissioned IT14SD declarations, taxpayers will now be subjected to a straight SARS verification. The procedure followed by SARS will be as follows:
- When a company submits its annual Corporate Tax Return (“ITR14”), and is identified for verification, a notification will be sent out the taxpayer via normal channels of communication, i.e. emails and SMS. One of two events will arise, with the first event being a request for supporting documentation, alternatively a request for the submission of a revised Corporate Tax Return ITR14.
- Compliance with these requests will see taxpayers submitting the requested supporting documents via the SARS E-Filing platform, SARS Online Query System (“SOQS”) amongst other mediums. Should the event arise that the requested documentation submitted to SARS be insufficient, additional requests for further supporting documentation will be issued to the taxpayer through the normal communication channels as listed above.
- SARS verification requests afford taxpayers 21 business days to respond to the verification with the requested supporting documentation detailed in the verification letter issued by SARS. Should the event arise that supporting documentation is not uploaded for verification, SARS is obligated and obliged to raise a revised assessment to resolve and finalize the verification case. Simply put, SARS may add back tax-deductible expenditure which the taxpayer is unable to satisfy SARS that the expenditure was ever actually incurred as detailed in the general deduction formula under section 11(a) read with section 23(g) of the Income Tax Act, No. 58 of 1962 as amended (“ITA”).
In short, with the decommissioning of the IT14SD, taxpayers will no longer be required to prepare detailed reconciliations for the purposes of SARS. However, with every action there is always a reaction. SARS will now look to implement and bring forward the SARS verification synergy by way of requesting specific, relevant supporting documentation underwritten using a risk-based approach. Failure by taxpayers to submit such information timeously within 21 business days may result in SARS raising additional assessments by way of invoking the provisions of section 92 of the Tax Administration Act, No. 28 of 2011 as amended (“TAA”).
Conclusion
The decommissioning of the IT14SD brings with it a great sigh of relief to many taxpayers. However, with that said, taxpayers are cautioned to keep abreast with documenting and storing of company information in the wake of this SARS verification process.
Record keeping and retention periods per the provisions of section 29 to 32 of the TAA are beyond the scope of this article.
If you have any questions kindly contact your local Moore Office.