By Essie Bester
The South African Revenue Service (SARS) will start making auto-assessments as from 1 August. This process is nothing new. It was instituted in 2019 for a limited number of taxpayers. This year it will only be used to accommodate a greater number of taxpayers.
How do you know if you will be assessed automatically?
Edward Kieswetter, the SARS commissioner, says that this year a significant number of taxpayers can expect to receive an SMS by the end of August indicating that SARS has compiled their tax returns on their behalf and that a draft assessment is available on eFiling or the SARS mobile app.
SARS obtains information such as your salary details, how much tax you paid and details of any allowances and deductions, such as pension funds and medical fund contributions, from your employer. They also obtain information about undertakings, such as your investment undertaking, with details about investments, interest earned and retirement annuity contributions. Your medical fund also provides information, such as what you paid, and any claims not paid by your medical fund.
If SARS believe they have all the information they need, your return will be assessed automatically. If not, SARS will advise you to complete a tax return yourself.
The process will work as follows:
- Employers and third parties must submit the required and correct data to SARS before the end of May.
- SARS then uses the particulars concerned to identify taxpayers who can be assessed automatically.
- SARS assesses the taxpayer automatically and sends him/her an SMS containing the results.
- Taxpayers signs into eFiling or the SARS mobile app and accepts the auto-assessment results.
- If there is a refund, it is processed and paid into a valid bank account. (If the banking details at SARS are invalid, the refund will not take place).
- If taxpayers do not agree with the results of the auto-assessment, they can amend their income tax return and resubmit is on 1 September 2020.
- Taxpayers who are not assessed automatically, can then also begin submitting their tax returns via eFiling or the SARS mobile app.
- Non-provisional taxpayers and those who have not accepted the results of an auto-assessment, must submit between 1 September and 16 November and those making use of branch facilities up to 22 October. Provisional taxpayers who have not accepted the outcome of an auto-assessment can submit when they are ready, but not later than 31 January 2021.
Taxpayers who are assessed automatically, have two options:
- Accept the results on eFiling or the SARS mobile app and if there is a credit, the refund is processed and paid.
- Do no agree with the auto-assessment and amend the return by providing the relevant or lacking information and resubmitting on 1 September.
During the lockdown SARS speeded up the online conversion of a number of services (which would have required a branch visit). This was done in order to simplify the process for taxpayers and facilitate collecting revenue during this challenging but critical time for the country’s tax revenue.
According to Kieswetter, it is anticipated that these changes will improve their service to taxpayers and taxpayers’ experience regarding the submission of tax returns. However, it is important that taxpayers review and update their personal information and banking details if necessary. This can all be done on eFiling or the SARS mobile app.
Taxpayers who cannot submit through any of the SARS digital platforms, will be allowed to visit one of its branches by appointment only.
What must you pay attention to when accepting an automatically prepared tax return?
Taxpayers must review their IRP5 / IT3 (a) s and other tax certificates, such as their medical certificates, retirement annuity fund certificates and other third party particulars against the information provided in the automatically prepared tax returns, before accepting the assessment.
It could also happen that additional incomes or deductions are omitted unwittingly. A donation made to a qualifying organisation, if you are trading and have earned business income, home office expenses that could be deducted, or claims not paid by a medical fund are all examples of income and expenses that will not be reflected in the tax return.
If you accept the automatically completed tax return without adding all deductions, you could miss out on tax relief. Alternatively, you could face tax fines if SARS later confirms that you earned income that was not declared.
If you don’t hear from SARS at all
Contact SARS or ask your tax consultant for help, as it could mean that SARS might possibly not have your contact details. Although SARS tries to automise as much as possible, you cannot accept that you need not complete a return if they don’t contact you. You have to confirm this with SARS.
As taxpayer you have to keep all tax records for at least five years after submission, even if you are assessed automatically and there aren’t any queries.