SARS may satisfy itself that a Tax Exempt Institution has complied with the various requirements of the tax laws in one of the following distinct processes:
- A review of the exemption status;
- A verification process; and
- An audit Process.
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What is an Exemption Review?
A Tax Exempt Institutions is required to comply with the various requirements of the relevant exemption section of the Income Tax Act under which it has been approved, at all times. Should SARS become aware of a possible non-compliance with any of the requirements, its exemption status may be taken on a review and ultimately withdrawn with certain penalties being incurred. SARS may also randomly select taxpayers to take on a review on an annual basis. A review of the exemption status may be initiated by a variety of factors, e.g. whistle-blowing, information in the public domain, information obtained during a verification or audit process, or random selection by SARS.
What is Verification?
Verification is a face-value verification of the information declared by the taxpayer on the declaration or in a return. This involves a comparison of this information against third party data gathered by SARS from various sources, the financial and accounting records and/or other supporting documents provided by taxpayers to ensure that the declaration/return is a fair and accurate representation of the taxpayer’s tax position. Once you have submitted your declaration/return, your declaration/return could be selected for verification.
What is an Audit?
It is an examination of the financial and accounting records and/or the supporting documents of the taxpayer to determine whether the taxpayer has correctly declared his/her tax position to SARS. Where the taxpayer has not made a declaration or filed a return, it is an investigation regarding whether the taxpayer’s actions comply with the provisions of the relevant tax legislation. SARS may also conduct a review of an exemption status through an audit process.
Voluntary Disclosure Programme
At all times, during verification or audit, the taxpayer can approach the Voluntary Disclosure Unit to make a voluntary disclosure. Refer to the Voluntary Disclosure programme for more guidance on that process.
Request for Correction
When you realise that you have made an error when completing your return, you should contact the SARS at teu@sars.gov.za or (012) 483 1700
