Too often, taxpayers seem to forget that the most important aspect of dealing with SARS is to ensure that they can discharge their burden of proof. As a taxpayer, it is on you to provide SARS with the relevant material that, on a balance of probabilities, supports your position.

Taxpayers are required to retain relevant records, books of account, and documents for a period of five years. It is important to note that such supporting materials must be kept in the prescribed form and manner.  Specific requirements apply where these materials are kept in electronic format, as prescribed by the SARS Commissioner in a public notice.

SARS has published a Public Notice wherein they set out these requirements. Taxpayers must understand these general requirements that apply to electronic record keeping.

Acceptable electronic form

The electronic records must be kept in an ‘acceptable electronic form’. This means a form in which the integrity of the electronic record satisfies the standard contained in Section 14 of the Electronic Communications and Transactions Act (ECTA), and that may be accessed by SARS for purposes of performing their administrative duties under the Act.

In addition, to be in an acceptable electronic form, the person required to keep the records must be able to, within a reasonable period when required by SARS, either –

• provide an electronic copy of the records in a format that SARS can readily access, read, and correctly analyse;
• send the records in an electronic form that is readily accessible by SARS; or
• provide SARS with a paper copy of the records.

The Public Notice stipulates that sending the records in an electronic form, or providing to SARS a paper copy thereof, is no longer permitted. Rather, the only manner to provide to SARS the electronic records, when requested to do so, will be to provide an electronic copy thereof to SARS in a format that is readily accessible, readable, and correctly analysable.

When providing the electronic copy, the person will also have to provide the following –

• database records on delimited, Microsoft Excel, or similar format; and
• records that substantiate database records—such as supplier invoices, purchase orders, bank statements, etc.—in portable document (PDF) or similar format.

Location of records

Electronic records must be kept and maintained at a place physically located in South Africa. However, a senior SARS official may authorise a person to keep the electronic records at a location outside South Africa if they are satisfied that the person complies with further conditions.

The Public Notice stipulates that if a person wants to keep the electronic records outside South Africa, they will have to sign and submit a declaration to SARS via email.

In addition, in the case of a person who is not a South African resident but is liable to register for VAT under Section 23(1A) of the Value Added Tax Act 89 of 1991, the natural person responsible for their VAT affairs must also sign and submit such declaration.

Save for the above two changes, the remainder of the electronic record keeping requirements have remained the same.

It is encouraging to see that SARS is once again on par with technological developments, thereby ensuring that they can effectively execute their mandate in an ever-changing environment.

Written by Jean Du Toit and Elanie Nunez

Jean du Toit and Elanie Nunez are tax specialists.

While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither writers of articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein.  Our material is for informational purposes.