The South African Revenue Service (SARS) will from August, begin to assess a significant number of taxpayers automatically, based on data received from employers, financial institutions, medical schemes, retirement annuity fund administrators and other third-party data providers.
In a guideline published this week, the revenue collector said that this process will be known as ‘auto-filing’ and that qualifying taxpayers will receive an SMS if they are selected to be auto-assessed.
“If you accept your auto-assessment, any under or overpayment of tax will be processed as normal. If you want to edit your return, you can file your return on eFiling or the SARS MobiApp,” it said.
SARS said that if you accept the outcome of the auto-assessment, you do not have to file a tax return at all.
In August, we will assess a significant number of taxpayers automatically, based on data received from employers, financial institutions, medical schemes, retirement annuity fund administrators and other 3rd party data providers. #YourTaxMatters https://t.co/AfT6yr6oDM
— SA Revenue Service (@sarstax) July 9, 2020
“We auto-assess based on the data we receive from employers, financial institutions, medical schemes, retirement annuity fund administrators and other third-party data providers.
“If you have not yet received your IRP5/IT3(a)s and other tax certificates like medical certificate, retirement annuity fund certificate and other 3rd party data that are relevant in determining your tax obligations, you should immediately approach your employer or medical scheme or retirement annuity fund or other 3rd party data providers to make sure that they have complied with their submission requirements.”
In an earlier emailed response to BusinessTech, a SARS spokesperson said that these auto-assessments were first implemented in 2019 for a limited number of taxpayers, but will now be rolled out to a wider range of tax payers.
The process will work as follows:
- Employers and third-parties submit required and correct data to SARS by end of May 2020;
- SARS uses the relevant data to identify taxpayers who can be auto assessed;
- SARS auto-assesses the taxpayer and issues an SMS to the taxpayer with the results;
- Taxpayer logs onto eFiling or SARS MobiApp and accepts the auto-assessment results;
- If there is a refund, the refund is processed and paid out to a valid bank account (if the bank details with SARS are invalid – SARS will not be able to pay the refund);
- If the taxpayer does not agree with results of the auto-assessment, they may edit and resubmit their income tax return on 1 September 2020.
SARS added that the auto-assessment process is not new and was introduced last year.
The tax collector emphasised that it was important for taxpayers to update and verify their personal information and banking details.
SARS’ move to auto assessments comes amid lower tax collections in the country, and following the outbreak of the Covid-19 pandemic.
Finance minister Tito Mboweni’s special adjustment budget, tabled in June, highlighted just what South Africa is up against as it fights a debilitating Covid-19 pandemic, rising unemployment, and a mountain of debt.
Mboweni said that government expects to miss its tax revenue target by over R300 billion this year. Gross tax revenue collected during the first two months of 2020/21 was R142 billion, compared to the initial forecast of R177.3 billion for the same period.
“Put another way – we are already R35.3 billion behind on our 2020/21 target. As a consequence, gross tax revenue for the 2020/21 fiscal year is revised down from R1.43 trillion to R1.12 trillion. That means that we expect to miss our tax target for this year by over R300 billion,” he said.
However, tax experts have warned that even the adjusted tax revenue of R1.12 trillion presented by Mboweni may not be achievable.
This is because, even though companies are reopening after weeks of nation-wide lockdown, for many this will be a gradual process over the next 12 months which will hamper them from recovering the losses they suffered during that time.
On top of this, other businesses will be forced to close, many employees will be retrenched from surviving ones, and remaining workers may be forced to take pay cuts of up to 30% or 40%, which will ultimately lead to even lower tax collections.
According to the finance minister, government plans to raise R40 billion through new taxes over the next three years to help cover the shortfall. While specific taxes weren’t mentioned, experts say the most likely avenue would be a special levy, or further taxes on the wealthy.