SARS Ruling

CompTIA CDIA+ Certified Electronic Document and Records Management (EDRMS) Analysts

CSD Technology cc (Compliant Storage & Disposition Technology)

SARS Ruling for Electronic Storage of Scanned Images

“Section 55 of the Value Added Tax Act 89 of 1991, as amended (hereinafter

referred to as "the VAT Act") sets out the records that must be kept, such as

invoices, books of account, VAT calculations, bank statements, deposit slips, stock lists, etc. In terms of section 55(3)(b) of the VAT Act such records must be retained and carefully preserved by the vendor for a period of five years from the date of last entry in any book. Section 55(4) of the VAT Act affords the Commissioner discretion in relation to manner in which the records could be retained. The Commissioner may permit the person to retain any book or document in some other form instead of retaining the original.”

NOTE!

Application MUST be made to the commissioner for permission to store scanned documents in electronic format and it must be proved to the Commissioner that the requester complies to the requirements as set out in the relevant section below.

The relevant sections of the Income Tax Act and VAT Act only afford the Commissioner a discretion regarding the manner in which the documents could be retained in any form instead of originals.

VAT ruling 378 stipulates the following requirements for acceptance of scanned

documents for VAT purposes:

· A proper audit trail is maintained;

· Destruction of the physical paper records after they have been retained for a period of a year;

· Retention of the scanned electronic format for a period of four years so that the requirement of both the Income Tax Act and the Value Added Tax Act are complied with for the retention of documents for a period of five years;

· The necessary equipment to reproduce paper copies of such documents will be available at the taxpayer's premises;

· Due to the fact that a copy of the original document is made, the documents scanned (not the originals) are clearly marked with the word "copy";

· An effective index is maintained in respect of the scanned documents;

· The database does not allow for any alteration or manipulation of such

The database referred to above, refers to a Records Management Database, or better known as an ERMS or EDRMS. Extreme care must be taken as to how and where the scanned images are stored. SARS will not accept the storage of an image that could have been tampered with. In other words, if there is NO AUDIT TRAIL.

Upon satisfying the above requirements, SARS will grant permission to destroy the HARD COPY paper after 12 months and keep the electronic copy for the remainder of the 5 year period, i.e. 4 years.

Permission granted by SARS (Example):

“Permission is hereby granted to yourselves for retention of the original physical paper records for a period of a year and the subsequent four years could be retained in a scanned electronic format so that the requirement of both the Income Tax Act and the Value Added Tax Act are complied with for the retention of documents for a period of five years, subject to the following requirements:”