Beware accepting your SARS auto-assessment without checking it

Tax Consulting South Africa has warned taxpayers to think twice before accepting SARS’s auto-assessments of their tax returns.

The tax collecting authority has announced that it will assess around 3.1 million taxpayers automatically during August.

Head of Individual Tax Returns at Tax Consulting South Africa Thamsanqa Msiza said the impression that the automatic assessment of certain taxpayers means that they no longer need to worry about their tax submissions was incorrect.

“The onus still lies with the taxpayer to ensure all information submitted to SARS is complete and correct,” Msiza stated.

He cautioned that before accepting the precompiled assessment, qualifying taxpayers should take time to check that all relevant data is present and accurate.

Neglecting to check the data for completeness and accuracy may be seen by the tax authority as a deliberate attempt to evade tax and could result in stiff penalties, Tax Consulting South Africa warned.

How SARS conducts auto-assessments 

SARS is able to complete certain taxpayers’ submissions by collecting electronic tax data from relevant parties.

These could include certificates provided by employers, financial institutions, medical schemes, retirement annuity fund administrators, and other third-party data providers.

It, therefore, needs little input from the taxpayer to complete the return submission.

Qualifying taxpayers will be notified by SMS and can access their precompiled assessment through eFiling or SARS’s MobiApp.

From here, they can review the assessment and click on the Accept button to accept the figures, or click the Edit button to amend the information.

Possible issues

However, Tax Consulting South Africa explained how the data in the assessment may be incomplete or inaccurate.

“Apart from this being a new system and therefore prone to teething problems, there are several other reasons why the precompiled information may be inaccurate,” warned Msiza.

“Even those who are employed may earn extra on the side from gigs, property rentals or other sources of income.”

“Similarly, individuals who are self-employed and have received taxable earnings exceeding R83,100 in the 2019/2020 tax year, will be considered Provisional Taxpayers and must declare this income as SARS will have no record of it,” Msiza added.

Other instances highlighted by Msiza include where an investment tax certificate, for example, may appear on the assessment, although the taxpayer holds no such investment.

In another case, an employer may have failed to submit a copy of the employee’s IRP5.

There may also be outstanding deductions, such as for:

  • Log book mileage against one’s travel allowance, that can only be captured from an employee’s own records.
  • Donations for which no tax certificate has been loaded on the return.

“In cases like these, the taxpayer must approach the issuer to correct the data and resubmit it to SARS promptly,” Msiza advised.

Check your SMS and seek professional advice

To avoid any failure to report earnings accurately, Msiza said taxpayers who qualify for the auto-assessment should check SARS’s preloaded information carefully against their own certificates.

Additionally, those with complex tax affairs should be particularly cautious and should seek direction from their tax attorney or tax practitioner.

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Beware accepting your SARS auto-assessment without checking it