The announcement by the SA Revenue Service (Sars) that it has started auto-assessing certain taxpayers may lead some people to believe they no longer need to worry about their tax submissions.
This is not the case, according to Thamsanqa Msiza, the head of individual tax returns at Tax Consulting SA.
“The onus still lies with the taxpayer to ensure that all the information submitted is complete and correct,” Msiza says.
So, before accepting the precompiled assessment, check that all relevant data is present and accurate. Neglecting to do so may be seen by the tax authority as a deliberate attempt to evade tax and could result in stiff penalties.
What is a Sars auto-assessment?
With digital technologies at its disposal, Sars is able to collect electronic tax data from employers, financial institutions, medical schemes, retirement annuity fund administrators and other third party data providers.
As such, it can compile and assess tax submissions with little input from the taxpayer.
Sars announced that, throughout this month, it will assess a large number of taxpayers automatically.
They will be notified by SMS and can access the precompiled assessment through eFiling or on Sars’ MobiApp, where they can review the assessment and click an “accept” button to accept the figures, or click an “edit” button to amend the information.
“Apart from this being a new system and therefore prone to teething problems, there are several other reasons the precompiled information may be inaccurate,” warns Msiza.
What to watch out for
Even those who are employed may earn extra from side gigs or property rentals, or have other sources of income.
Similarly, individuals who are self-employed and have received taxable earnings exceeding R83 100 in the 2019/20 tax year will be considered provisional taxpayers and must declare this income because Sars will have no record of it.
Other instances highlighted by Msiza include an investment tax certificate, for example, appearing on the assessment although the taxpayer holds no such investment. Or an employer may fail to submit a copy of the employee’s IRP5.
There may also be outstanding deductions, such as the log book mileage against one’s travel allowance, which can only be captured from an employee’s own records. Or donations for which no tax certificate has been loaded on the return.
“In cases such as these, the taxpayer must approach the issuer to correct the data and resubmit it to Sars,” says Msiza.
A convenience, not a pass
A Sars auto-assessment will be a welcome convenience for many. However, it doesn’t take all the work out of tax submissions and it does not release the taxpayer from the responsibility of declaring all their earnings accurately.
“If you receive an SMS notifying you that you have been auto-assessed, take the time to check the information carefully against your own tax certificates,” advises Msiza.
Those with complex tax affairs should be particularly cautious and seek direction from their tax practitioner. This way, they will avoid unpleasant surprises and assure themselves that they have made effective use of any tax relief to which they are legally entitled.