SARS audits can be time-consuming and stressful, but many triggers are entirely within your control. Understanding what attracts SARS’s attention, and taking proactive steps, can significantly reduce your risk. Here are the top five audit triggers for South African taxpayers and practical strategies to keep you in SARS’s good books.
Significant Fluctuations in Income, Deductions or Expenses
When your declared figures jump or dip sharply from one year to the next, SARS flags the anomaly for review.
How to avoid it:
- Maintain consistent accounting policies and apply them year after year.
- Document major changes (for example, new contracts, business expansions or one-off expenses) in a brief management memo.
- If you anticipate true volatility, such as a large capital sale, notify your tax advisor in advance so they can prepare supporting schedules.
Excessive Travel, Subsistence and Entertainment Claims
Claims that far exceed industry norms or internal ratios draw scrutiny, especially for small- to medium-sized enterprises.
How to avoid it:
- Adopt a clear travel and subsistence policy aligned with SARS guidelines.
- Require detailed substantiation: itineraries, meeting agendas and proof of payment.
- Cap monthly or annual claims per employee, and run monthly internal reviews to catch outliers early.
Underreported Foreign Income or Offshore Holdings
With the CARF and CRS frameworks coming online, SARS will automatically receive more data on international crypto, bank and investment accounts.
How to avoid it:
- Conduct an offshore-asset inventory: list every foreign bank account, investment, trust, CFC and crypto-asset holding.
- Declare all foreign interest, dividends and capital gains—even minor amounts.
- If you discover past omissions, consider a Voluntary Disclosure Programme (VDP) application before SARS receives your data automatically.
Cash-Intensive or High-Risk Industries
Restaurants, spaza shops, salons and other cash-heavy businesses are perennial audit targets due to the potential for unrecorded sales.
How to avoid it:
- Implement point-of-sale (POS) systems that generate daily Z-reports.
- Reconcile daily cash takings against bank deposits.
- Engage a reputable bookkeeper or accountant to prepare monthly management accounts and flag discrepancies immediately.
Late, Inaccurate or Incomplete VAT and PAYE Submissions
Returns lodged after the deadline, or with mathematical errors, are automatic red flags.
How to avoid it:
- Automate your payroll and VAT calculations using SARS-approved software.
- Schedule internal reminders a week before every EM and VAT due date.
- Reconcile your ledger balances to SARS’s eFiling figures monthly, then correct any errors before submission.
Building a Robust Compliance Framework
Preventing an audit isn’t about hiding from SARS, it’s about demonstrating that your tax affairs are managed professionally, transparently and consistently. Key best practices include:
- Regular internal reviews: Monthly or quarterly checks help you catch discrepancies before SARS does.
- Comprehensive record-keeping: Digitise invoices, receipts and contracts; back them up securely in the cloud.
- Professional oversight: Partner with tax specialists who understand SARS’s evolving requirements and can guide you through complex triggers.
How CTFSA Can Help
At CTFSA, our team specialises in South African tax compliance and audit support:
- We audit-proof your financials, implement policies and document rationale behind unusual transactions.
- We coach your staff on substantiation standards for travel, entertainment and cash collections.
- We manage VDP submissions if you need to rectify past non-compliance before SARS’s automated reporting regimes kick in.
Don’t wait for an audit letter. be proactive. Contact CTFSA today to safeguard your tax position and sleep easy knowing your affairs are in order.
