FOR IMMEDIATE RELEASE
Johannesburg, South Africa – July 27, 2010 – SARS LBC launches NEW special project on PAYE audits.
SARS LBC has launched a special project targeting all LBC clients country wide, due to staffing restraints, all LBC offices and all sectors with PAYE specialists are involved in the project, thus you may receive the questionnaire from Durban LBC while you are registered at Mega-Watt Park.
The limited scope audit questionnaire is targeting share schemes, expatriates and travel allowances. The questions have been formulated to ensure that in most instances further investigation will be required.
The amendments to Para 5 of the Fourth Schedule allows SARS to raise an assessment post 1st March 2010, which if the capital is not recovered from the affected staff would result in limitation of deductions of the capital, effectively allowing SARS to recover the capital PAYE of 40% and further Income Tax of 28% on their audit.
The period of the audit is extended to include the years of assessment ended February 2005 through 2009. In an attempt to avoid Prescription principles, SARS are intending to raise estimated assessments based on Para 12 of the Fourth Schedule, by side stepping an ‘additional assessment’ as provided for in section 79.
In discussion with my colleague Steve Krause, it has been agreed that LBC clients can expect swift audit periods with estimated assessments raised based on findings, pre-dominantly focused on placing the matter in an ADR process with the Pay-Know-Argue-Later doctrine as the primary focus.
By way of example, point 2 of the travel allowance section requests confirmation that the recipient of a travel allowance is specifically instructed to travel for business purposes, should the response be in the negative, the Employer will be required to substantiate every travel allowance paid.
Those employees who ‘cancelled’ their travel allowance after the last amendments would be highlighted. Those entities that pay travel allowances and re-imbursement rates will be required to give reason(s) why certain travel allowance recipients do not claim re-imbursements. The list goes on.
Completion of the Questionnaire must not be viewed lightly; SARS has re-focused on Employee’s Tax and recruited specialists from the market place to achieve for the first time a potential capital audit result of 68% on one audit.
Should you not be a LBC client, be assured that the other divisions of SARS will follow suit shortly.
For further direction on these issues please contact Gilbert Ferreira on 083 296 4954 to arrange an appointment.
Prof Daniel N Erasmus