A SARS audit is a review of your business’s financial records and tax submissions to ensure compliance with South African tax laws. SARS may initiate an audit if they detect discrepancies, such as repeated VAT refund claims or mismatched figures across returns.
Types of SARS Audits
- VAT Audit
This audit checks the accuracy of your VAT returns.
Common issues
1)Claiming VAT on non-business expenses, such as private vehicle or entertainment costs
2) Missing or invalid tax invoices
Preparation tips:
1) Ensure all VAT invoices meet SARS requirements
2) Reconcile VAT accounts regularly doing reconciliations between SARS and your accounting systems.
- Company Income Tax (CIT) Audit
The IT14 audit is used by SARS to cross-verify the information submitted on the company’s ITR14 (Income Tax Return) with other tax types submitted during the year, including VAT, PAYE, and Customs. This form ensures that the financial data reported across all tax types is consistent. For example, if a company declares a certain amount of income on the ITR14, SARS expects that figure to align with what was submitted via VAT returns.
Common risks:
Inconsistencies between tax types and the IT14 return
Preparation tips:
- Ensure financial statements comply with accounting standards
- Match your PAYE and VAT returns to the IT14
- EMP501 Audit
This audit verifies your PAYE, UIF, SDL, and ETI declared on monthly EMP201s against IRP5/IT3 certificates issued to employees and your payroll.
Common issues:
- Payroll not matching SARS submissions
Preparation tips:
Reconcile monthly EMP201s to IRP5/IT3 certificates and employee payslips
Final Word:
Being audit-ready means having clean records, aligning your tax returns accurately, and avoiding penalties. Staying compliant protects your business and gives you peace of mind.
If you need assistance with a SARS VAT, CIT, or EMP501 audit, contact us today. We’re here to support you through the process.