Every year, millions of South Africans receive a SARS auto-assessment based on data that SARS already holds.
However, while SARS has enhanced parts of its auto-assessment process and online tax assistant, it’s advisable to do a careful review before accepting. If you don’t respond, SARS treats that as you being in agreement with the assessment issued.
SARS’ system’s capabilities now include:
- pre-filled third-party data, such as investment income;
- a simplified return with clearer questions;
- a drop-down of approved medical-aid schemes to reduce errors;
- delivery of assessment notices via WhatsApp; and
- a declaration alert questionnaire intended to reduce the number of returns flagged for verification.
SARS auto-assessments have genuinely improved, but SARS can only assess what it can see. If any of your income or deductions aren’t in the data that SARS receives independently from third parties, your assessment won’t include them, so it’s your responsibility to fix it.
Third-Party Data
A SARS auto-assessment is generated from information supplied by third parties, including IRP5 data from employers, medical-aid certificates from medical schemes, retirement-annuity certificates from funds, and investment-income certificates from financial institutions.
Pre-filling these sections of the tax return reduces administration, and helps most people to get it right the first time.
However, SARS highlights the following on its auto-assessment page: “You must make sure that your assessment is complete. For example, if you received rental income or other income, or have deductions in addition to what we reflected in your assessment, you must file a tax return.”
Common items that may be missing include:
- Freelance, side-hustle, or other self-employment income
- Rental income
- Foreign income
- Section 18A donations to approved organisations
- Qualifying out-of-pocket medical expenses
- Home-office expenses
- Business travel claims against a travel allowance
- Direct retirement annuity contributions not reported by a fund.
Missing income and missing deductions give rise to two different problems. Missing income can lead to under-declaration, and SARS queries down the line, while missing deductions means that you are leaving money on the table.
Therefore, to ensure that your tax position is correct – i.e., you have paid neither too little nor too much – be sure to check your auto-assessment carefully for correctness.
What to Check
Before accepting your auto-assessment, you as the taxpayer should confirm that the income, deductions, and personal details in the assessment match your actual position for the tax year.
Unfortunately, where the third-party data itself is wrong – say, a medical-aid or IRP5 figure – taxpayers cannot simply edit it on the return. SARS requires the original provider (the employer, medical scheme, or fund) to correct the information and resubmit it.
Only deductions and income that SARS didn’t have can be added by the taxpayer when they file.
If you do not respond to your auto-assessment, SARS treats that as you having agreed with the information contained therein, and the assessment stands. Any refund of R100 or more is paid automatically, which SARS says happens within 72 hours, provided there are no banking, compliance or verification issues.
If you don’t agree with the auto-assessment, you can file a corrected return through your preferred tax filing channel. Therefore, your best approach is to take a few minutes to check the numbers against your real situation.
WRITTEN BY ANDRE BOTHMA
Andre Bothma is a tax specialist.
While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither writers of articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes.