The South African Revenue Service (SARS) says it will automatically assess “a significant number” of taxpayers this year.
This means that it will complete tax returns with all the information it received from taxpayers – these are gathered from employers, banks, medical schemes, retirement annuity administrators and other companies – after which an assessment will be sent to the taxpayer. Once the assessment is accepted, no tax return will have to be filed.
The auto assessments have been in motion since last year, but this year a much larger group of taxpayers will receive already completed returns.
SARS will send an SMS by end-August to say that the completed return is available in eFiling or on the SARS mobile app.
If the assessment is accepted and a refund is due, it will be paid into the taxpayer’s bank account.
If the assessment is disputed, the edited tax return can be filed electronically by 16 November.
According to Thamsanqa Msiza, head of individual tax returns at Tax Consulting SA, each taxpayer needs to validate their auto-prepared tax return with the information they received from third parties, before accepting the assessment.
Taxpayers should check their IRP5/IT3(a)s and other tax certificates like your medical certificate, retirement annuity fund certificate and other third-party data against the information provided in the return.
If taxpayers don’t have these certificates yet, they need to contact their employer, medical scheme, retirement annuity fund and other third parties to get it.
Taxpayers who have more complex returns – i.e. travel allowance claims – will need to carefully review their auto-assessments, Msiza says.
Being auto-assessed has its cons
One concern is that SARS will issue auto-assessments based only on the data which third parties are obliged to submit to SARS, and to the extent that such data meets its verification process.
Meaning that additional income or deductions may not be included.
For example, if a donation was made to a qualifying organisation, taxpayers may be able to claim a tax deduction. Or if a taxpayer started trading and now earns a business income, this may also not be reflected in the tax return.
Taxpayers may also have had home office expenses that can be deducted or claims that medical aids did not pay, which may not be reflected on tax returns.
If taxpayers accept the auto-completed tax return without adding these deductions, they may miss out on tax relief.
Alternatively, they could also face tax penalties if SARS later confirms that taxpayers have earned income that wasn’t declared.