Estimated assessments to be issued for trusts

What is a request for verification?

A letter requesting verification from the taxpayer is issued by SARS to enable SARS to verify the authenticity of the information disclosed on the income tax return submitted to SARS.  The Tax Administration Act 28 of 2011 (“TAA”) makes is clear that a taxpayer who receives a request for relevant material from SARS, must submit the relevant material in the format and time specified in the request by SARS.

The general information request by SARS on submission of a trust return is as follows:

• Annual Financial statements relating to the relevant year of assessment
• Minutes and resolutions of the Trustees
• Copy of Trust Instrument (Deed or Will)
• Beneficial Ownership document per entity listed
• Letter of Authority

SARS may ask additional questions as a result of the enhancement of their verification process.

What is new?

The above verification process has been in place for a number of years where SARS have issued a standard information request to taxpayers to verify their information.

SARS has not, however, always enforced the submission of the requested information be provided to SARS or imposed any adverse consequences

SARS is now reinforcing the provisions of section 95(1)(c) of the TAA, that states that SARS may make an estimated assessment based on the information readily available to SARS, where the taxpayer has not submitted a response to a request for relevant material.

Failing the requested information being provided to SARS, the taxpayer will receive a notice of assessment (ITA34) when such revised estimated assessment has been issued. The taxpayer will have the option of submitting the outstanding supporting documents to SARS within 40 business days from the date of the revised estimated assessment issued.

Should there be reasonable ground for extension, SARS may provide additional time to provide the supporting documents requested.

Taxpayers can submit supporting documents via SARS eFiling, the SARS Online Query System (SOQS), or by booking an appointment at a SARS branch.

Consequences if supporting documentation is not provided

Where no further action is taken by the taxpayer following the issuing of an estimated to upload the necessary supporting documentation, the assessment will become final and not subject to objection or appeal.

An estimated assessment will only be subject to objection or appeal if SARS decides not to make a reduced or additional assessment following the submission of supporting documentation.