With the introduction of the Tax Administration Act (TAA), specific rules have now been introduced in relation to electronic record-keeping.
In terms of section 30(1)(b) of the TAA, records may be kept in electronic form as prescribed in the schedule attached to Government Gazette Number 35733 of 1 October 2012.
A person is allowed to keep records in electronic format if it is retained in an 'acceptable electronic form'. Records would be in an acceptable electronic form if the information remains complete and unaltered except for any changes which arise in the normal course of communication, storage and display (i.e. the integrity of the records complies with the standard contained in section 14 of the Electronic Communications & Transactions Act).
It is required that records are kept and maintained at a place physically located in South Africa. However, SARS may also authorise that the records are maintained at a physical location other than South Africa in limited circumstances, such as where electronic access to the records is possible from the person's physical address in South Africa for the duration of the period that the person is required to keep and retain the records and where an international tax agreement with the country of location exists for reciprocal assistance in the administration of taxes.
There are also requirements for additional documents to be retained where computer software or electronic platforms are altered or adapted for the person's specific requirements.
Finally, adequate storage and back-up of the electronic records should be ensured, including the storage of the media on which electronic records are stored, the storage of all electronic signatures, etc. Electronic records, log-in codes, keys, passwords and certificates to allow access, should therefore be readily available when SARS wishes to perform a tax audit and/or to inspect the system.
All other obligations as prescribed in the TAA and Tax Acts in relation to a person's duty to keep records also applies to records in electronic format, as well as the prescribed periods of retention.
We would recommend that professional advice is obtained to ensure that all the requirements are met where records are kept in electronic format and where necessary approval is obtained from SARS.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.