BASICS OF RECORD KEEPING & RETENTION OF RECORDS

Introduction:

Effective record keeping is crucial for sustaining and growing a business. Without it, business owners risk facing cash flow issues, unnecessary expenses, and missed growth opportunities. Bookkeeping serves to assist business leaders in managing their operations and allows the South African Revenue Service (SARS) and other regulators to assess business activities accurately. SARS mandates that businesses maintain proper records to ensure accurate tax returns.

These records must substantiate the entries in the business’s books and its tax filings.

 What You Need to Do:

Before making any decisions regarding bookkeeping, consult with our Tax Shop Professional and Tax Practitioner. Bookkeeping requirements vary by business and industry. Business owners might find it beneficial to delegate certain bookkeeping functions to their Tax Shop Accountant, freeing up their time to focus on growing their business.

It is essential for business owners to regularly review their books to maintain thorough knowledge of their financial status. Tax Shop Accountants can provide valuable management information, allowing business owners to concentrate on expansion opportunities. By utilising The Tax Shop’s services for bookkeeping and related tasks, business owners can optimise their time and resources.

The Tax Shop offers excellent cloud-based systems for accounting functions and payroll at reduced pricing, ensuring efficient and cost-effective management of your business’s financial needs.

Basic records:

The basic records that need to be kept by a business are:

▪ Revenue and expenditure

▪ Cash expenditure

▪ Inventory records, including annual physical verification of the quantities and condition thereof

▪ Accounts receivable

▪ Accounts payable

▪ Undrawn profits

▪ Loans

▪ Fixed asset register

▪ Supporting vouchers/slips/documents of cash receipts and payments, sales invoices, purchase invoices

▪ Payroll register

▪ Investment income

These records must show the date, the nature, and the amount of the transaction, as well as the parties to the transaction.

What Next?

Speak to a Tax Shop Polokwane West Accountant and Tax Practitioner about the most suitable record-keeping practices for your business. Various legislative requirements dictate how long records must be retained.

 Consult your Tax Shop Accountant to identify the specific regulations relevant to your business. This guide covers general legislation impacting a wide range of entities and does not encompass all legislative details.

Close Corporations Act

The Administrative Regulations of the Close Corporations Act, No. 69 of 1984 identify the various periods that documents relating to the close corporation must be retained:

Document	Retention Period
Schedule 3 amended by Government Notice R1664 of 1982
Accounting records, including supporting schedules to accounting records and ancillary accounting records.	15 years
Founding statement (form CK1).	Indefinite
Amended founding statement (forms CK1 and CK2A).	Indefinite
Annual financial statements, including annual accounts and the report of the accounting officer.	15 years
Microfilm image of any original record reproduced directly by the camera – the ‘camera master’.	Indefinite
Minutes books as well as resolutions passed at meetings.	Indefinite

Companies Act

The Companies Act, No. 71 of 2008, (should be read with the Companies Amendment Act, No. 3 of 2011, and the Companies Regulations, 2011) expressly provides that records must be kept “in written form, or other form or manner that allows that information to be converted into written form within a reasonable time”.

Document	Retention Period
Reference: Section 24
General rule for company records: Any documents, accounts, books, writing, records, or other information that a company is required to keep in terms of the Act and other public regulation.	7 years or longer (per regulation)
Registration certificate.	Indefinite
Memorandum of Incorporation and alterations or amendments.	Indefinite
Rules.	Indefinite
Securities register and uncertificated securities register.	Indefinite
Register of company secretary and auditors.	Indefinite
– Regulated companies (companies to which Chapter 5, Part B, C and Takeover Regulations apply) – Register of disclosures of person who holds beneficial interest equal to or more than 5% of the securities of that class issued.	Indefinite
– Notice and minutes of all shareholders meeting including: – Resolutions adopted. – Document made available to holders of securities.	7 years
Copies of reports presented at the annual general meeting of the company.	7 years
Copies of annual financial statements required by the Act.	7 years
Copies of accounting records as required by the Act.	7 years
Record of directors and past directors, after the director has retired from the company.	7 years
Written communication of holders of securities.	7 years

Consumer Protection Act

The Consumer Protection Act, No. 68 of 2008, seeks to promote a fair, accessible and sustainable marketplace, to provide for improved standards of consumer information and to prohibit certain unfair marketing and business practices.

The Act (should be read with the Consumer Protection Act Regulations) has specific requirements for information to be kept by intermediaries, for auctions and promotional competitions.

Document	Retention Period
Reference: Section 27(3)(b) and Regulation 10 Disclosure by intermediary
Information provided to a consumer by an intermediary: – Full names, physical address, postal address and contact details – ID number and registration number – Contact details of public officer in case of juristic person – Service rendered – Intermediary fee – Cost to be recovered from the consumer – Frequency of accounting to the consumer – Amounts, sums, values, charges, fees or remuneration specified in monetary terms.	3 years
Disclosure in writing of a conflict of interest by the intermediary in relevance to goods or services to be provided.	3 years
Record of advice furnished to the consumer reflecting the basis on which the advice was given.	3 years
Written instruction sent by intermediary to the consumer.	3 years
Reference: Section 36(11)(b) and Regulation 11 Promotional competitions
A person who conducts a promotional competition must retain: – Full details, including identity or registration numbers, addresses and contact numbers of the promoter – Rules of promotional competition – Copy of offer to participate in promotional competition – Names and identity numbers of persons responsible for conducting the promotional competition – Full list of prizes offered in promotional competition – A representative selection of materials marketing the promotional competition – List of all instances when the promotional competition was marketed, including dates, medium used and places where marketing took place – Summary describing the proceedings to determine the winner – Whether an independent person oversaw the determination of the prize winners – The means by which the prize winners were announced and frequency – List of names and identity numbers of prize winners – List of dates when prizes were handed over to the prize winners – Steps taken by the promoter to contact the winner – Reasons for prize winner not receiving or accepting the prize and steps taken by the promoter to hand over the prize.	3 years

Electronic Communication and Transaction Act

The Electronic Communication and Transaction Act, No. 25 of 2005, provides principles for the electronic collection of personal information and the period in which this information must be kept. This Act regulates electronic communication and prohibits the abuse of information.

Document	Retention Period
Reference: Section 51
Personal information and the purpose for which the data was collected must be kept by the person who electronically requests, collects, collates, processes or stores information.	If info is used and at least 1 year thereafter
A record of any third party to whom the information was disclosed must be kept for as long as the information is used.	If info is used and at least 1 year thereafter
All personal data which has become obsolete.	Destroy

Compensation for Occupational Injuries and Diseases Act

The Compensation for Occupational Injuries and Diseases Act, No. 130 of 1993, states that certain records that relate to the earnings should be retained The Act provides for compensation for disablement caused by occupational injuries or diseases sustained or contracted by employees in the course of their employment or for death by these injuries at their place of work

Document	Retention Period
Reference: Section 8(1) and (2)
Register, record or reproduction of the earnings, time worked, payment for piece work and overtime and other prescribed particulars of all the employees.	4 years

Occupational Health and Safety Act

The Occupational Health and Safety Act, No. 85 of 1993, requires that certain documents be kept based on the Administrative Regulations. This Act was enacted to provide for the health and safety of employees at work and for people using plant and machinery and working in other hazardous employment conditions.

Document	Retention Period
Reference: Section 20(2)
A health and safety committee shall keep record of each recommendation made to an employer in terms of issues affecting the health of employees and of any report made to an inspector in terms of the recommendation.	3 years
Records of incidents report at work (Annexure 1 of the General Administration Regulations, 2003).	3 years
Reference: Asbestos Regulations, 2001, Regulation 16(1)
Records of assessments and air monitoring and the asbestos inventory.	Min 40 years
Medical surveillance records.	Min 40 years
Reference: Hazardous Biological Agents Regulation, 2001, Regulation 9(1) and (2)
Records of risk assessments and air monitoring results.	40 years
Medical surveillance records.	40 years
Reference: Hazardous Chemical Substance Regulations, 1995, Regulation 9
Records of risk assessments and air monitoring results.	30 years
Medical surveillance records.	30 years
Reference: Lead Regulations, 2001, Regulation 10
Records of risk assessments and air monitoring results.	40 years
Medical surveillance records.	40 years

Basic Conditions of Employment Act

Various legislation governs employee relations, including the Basic Conditions of Employment Act and the Labour Relations Act. The Basic Conditions of Employment Act, No. 75 of 1997, provides that various documents relating to employees should be kept for future reference.

Document	Retention Period
Reference: Section 29(4)
Written particulars of employee must be kept after termination of employment.	3 years
Reference: Section 31
Employee’s name and occupation.	3 years
Time worked by each employee.	3 years
Remuneration paid to each employee.	3 years
Date of birth of any employee under 18 years of age.	3 years

Employment Equity Act

The Employment Equity Act, No. 55 of 1998, has certain requirements about the retention of certain documents. This Act provides for employment equity and applies to employers and employees.

Document	Retention Period
Reference: Section 26
An employer must establish and maintain records in respect of its workforce, its employment equity plan and other records relevant to compliance with the Act for the prescribed period.
General Administrative Regulations, 2009 Reference: Regulation 3(2)
A designated employer who employs 150 or more people must retain the employment equity plan.	3 years after expiry of plan
A designated employer who employs fewer than 150 people must retain the employment equity plan.	2 years after expiry of plan
Reference: Section 21 General Administrative Regulations, 2009 Reference: Regulation 4(10) and (11)
A designated employer must submit a report to the Director General as indicated in section 21. This report should be retained after submission to the Director General: – By a large employer. – By a small employer.	3 years 2 years

Labour Relations Act

The Labour Relations Act, No. 66 of 1995, requires that various records be kept for future reference. This Act applies to employees, employers, trade unions and employers’ organisations and provides a framework whereby the parties can collectively bargain regarding remuneration, basic conditions of service and related matters.

Document	Retention Period
Reference: Section 53(4)
Bargaining Council must retain the following documents in original or reproduced form: – Books of account – Supporting vouchers – Income and expenditure statements – Balance sheets’ – Auditor’s reports – Minutes of its meetings	3 years
Reference: Section 98(4)
Registered trade unions and registered employers’ organisation must retain the following documents in original or reproduced form: – Books of account – Supporting vouchers – Records of subscriptions or levies paid by its members – Income and expenditure statements – Balance sheets’ – Auditor’s reports – Minutes of its meetings (reference: section 54)	3 years
Reference: Section 99
Registered trade unions and registered employers’ organisation must retain a list of their members.	Indefinite
Minutes of its meetings, in an original or reproduced form from the end of the financial year	3 years
Registered trade unions and registered employers’ organisation must retain the ballot papers for a period of three years from the date of every ballot	3 years
Reference: Section 205(1) and (2)
Records to be kept by the employer in original or reproduced form: – Collective agreements – Arbitration award	3 years
Reference: Section 205(3)
Employer must keep prescribed details of any strike, lock-out or protest action involving its employees.	Indefinite
Schedule 8, Section 5
Employers should keep records for each employee specifying the nature of any disciplinary transgressions, the actions taken by the employer and the reasons for the actions.	Indefinite
Schedule 3, Section 8(a)
The Commission must keep the following records: – Books of account. – Record of income, expenditure, assets, and liabilities	Indefinite

Unemployment Insurance Act

The Unemployment Insurance Act, No. 63 of 2002, applies to all employers and workers, except for:

▪ Workers working less than 24 hours a month for an employer

▪ Learners

▪ Public servants

▪ Foreigners working on contract

▪ Workers who get a monthly State (old age) pension or

▪ Workers who only earn commission

Domestic employers and their workers have also been included under the scope of the Act since 1 April 2003.

Document	Retention Period
Reference: Section 56(2)(c)
Employers must maintain personal records of each of their current employees in terms of: – Names – Identification numbers – Monthly remuneration – Address where employee is employed	Refer to 4th schedule, paragraphs 14(1)(a)-(d) of Income Tax Act

Tax Acts

The Income Tax Act, No. 58 of 1962, governs all the laws relating to income taxes and donations. The Value Added Tax Act, No. 89 of 1991, provides for the taxation of the supply of goods and services as well as the importation of goods. The Tax Administration Act, No. 28 of 2011, has been effective from 1 October 2012 – this Act has not removed the retention requirements from the Income Tax Act nor the Value Added Tax Act and has included the requirements for document retention. Retention requirements in terms of the Acts are laid out below.

Tax Administration Act

Section 29 of the Tax Administration Act, No. 28 of 2011, states that a person must keep the records, books of account or documents that:

▪ Enable the person to observe the requirements of the Act.

▪ Are specifically required under a Tax Act or by the Commissioner by public notice; and

▪ Will enable the South African Revenue Service (SARS) to be satisfied that the person has observed these requirements:

Document	Retention Period
Reference: Section 29(3)(a)
Taxpayers that have submitted a return.	5 years from date of submission
Taxpayers who were meant to submit a return but have not for that period.	Indefinite, until the return is submitted – then the 5-year rule applies
Reference: Section 29(3)(b)
Taxpayers who were not required to submit a return but had capital gains/losses or engaged in any other activity that is subject to tax or would be subject to tax but for the application of a threshold or exemption.	5 years from end of the relevant tax period
Reference: Section 32(a)
A person who has been notified or is aware that the records are subject to an audit or investigation.	In addition to the 5-year rule records must be retained until audit is concluded or assessment or decision becomes final.
Reference: Section 32(b)
A person who has lodged an objection or appeal against an assessment or decision under the Tax Administration Act.	In addition to the 5-year rule records must be retained until audit is concluded or assessment or decision becomes final.

Income Tax Act

In addition to the records required in Chapter 4, Part A of the Tax Administration Act, every employer must keep the following records in terms of the Income Tax Act, No 58 of 1962:

Document	Retention Period
Reference: 6th Schedule, paragraphs 14(a) – (d)
Notwithstanding the provisions of Part A of Chapter 4 of the Tax Administration Act, a registered micro business must only retain a record of: – Amounts received by that registered micro business during a year of assessment. – Dividends declared by that registered micro business during a year of assessment. – Each asset of that registered micro business as at the end of a year of assessment with a cost price of more than R10,000. – Each liability of that registered micro business as at the end of a year of assessment that exceeded R10,000.	5 years form date of submission or 5 years from end of the relevant tax year depending on type of transaction.
Reference: 6th Schedule, paragraphs 14(a) – (d)
Notwithstanding the provisions of Part A of Chapter 4 of the Tax Administration Act, a registered micro business must only retain a record of: – Amounts received by that registered micro business during a year of assessment. – Dividends declared by that registered micro business during a year of assessment. – Each asset of that registered micro business as at the end of a year of assessment with a cost price of more than R10,000. – Each liability of that registered micro business as at the end of a year of assessment that exceeded R10,000.	5 years form date of submission or 5 years from end of the relevant tax year depending on type of transaction.

Value Added Tax Act

In addition to the records required in Chapter 4, Part A of the Tax Administration Act, every vendor must keep the following records in terms of the Value Added Tax Act, No 89 of 1991:

Document	Retention Period
Reference: Section 15(9)
Where a vendor’s basis of accounting is changed the vendor shall prepare lists of debtors and creditors showing the amounts owing by the debtors and owing the creditors at the end of the tax period immediately preceding the changeover period.	5 years from date of submission of the return
Reference: Section 16(2)
Records of importation of goods and documents: – Bill of entry, or. – Other documents prescribed by the Custom and Excise Act – Proof that the VAT charge has been paid to SARS.	5 years from date of submission of the return
Reference: Section 55(1)(a)
Vendors are obliged to keep the following records: – Record of all goods and services – The rate of tax applicable to the supply and the suppliers or their agents – Invoices – Tax invoices – Credit notes – Debit notes – Bank statements – Deposit slips	5 years from date of submission of the return
Document	Retention Period
– Stock lists – Paid cheques	5 years from date of submission of the return
Reference: Interpretation Note 31 (30 March 2013)
Documentary proof substantiating the zero rating of supplies.	5 years from date of submission of the return
Where a tax invoice or credit or debit note has been issued in relation to a supply by an agent or to an agent or a bill of entry as described in the Customs and Excise Act the agent shall maintain sufficient records to enable the name, address and Vat registration number of the principal to be ascertained.	5 years from date of submission of the return

The records, books of account and documents must be retained in their original form in a safe place, or electronic format as prescribed by the Commissioner or in a form authorised by a senior SARS official. SARS issued a public notice on 1 October 2013 (GG35733, notice 787), which prescribes, in the schedule attached to the notice, the electronic form that records, books of account and documents that are required to be kept or retained must take.

Source: South African Institute of Chartered Accountants Guide on Retention of Records

At The Tax Shop Polokwane West (Pty) Ltd, we understand the complexities of record-keeping and the importance of compliance with various legislative requirements.

Our highly qualified team is here to assist you every step of the way. With our expertise and dedication, we ensure that your records are meticulously maintained, allowing you to focus on growing your business.

All you must do is ask, and we’ll make your life easier. Trust us to handle your accounting and tax needs with precision and care, so you can achieve your business goals with confidence.

DISCLAIMER:

The information supplied in this document is not intended to be a guarantee of fact. In no event will The Tax Shop Polokwane West (Pty) Ltd be liable for any lost revenue, profit, or for direct, special, indirect, consequential, incidental or punitive damages however caused and regardless of theory of liability, arising out of the use of this document, even if The Tax Shop Polokwane West (Pty) Ltd has been advised of the possibility of such damages