The Companies Act states that any documents, accounts, books, writing, records or other information pertaining to a company must be kept for a period of 7 (seven) years. However, the Income Tax Act, the Customs and Excise Act and the Value Added Tax Act require records of a company to be kept for a period of no longer than 5 (five) years. This leads to controversy when considering the question as to whether a company will be in contravention of the Companies Act should it dispose of records after only five years, as permitted by the South African tax legislation.
The Companies Act states that should there be an inconsistency between any provision of the Companies Act and a provision of any other national legislation, the provisions of both Acts must be applied concurrently, to the extent that it is possible. Should it not be possible to apply or comply with one of the inconsistent provisions without contravening the second, the Companies Act prescribed a number of national legislative documents that will prevail over the provisions of the Companies Act.
Neither the Income Tax Act, the Customs and Excise Act nor the Value Added Tax Act are listed, the implication being that the provisions of the Companies Act will prevail. Taxpayers, being companies regulated by the Companies Act, will have to keep records for a period of 7 (seven) years before disposing thereof.