Implications that the SARS auto-assessment could have on taxpayers

The 2022 filing season began in earnest at the beginning of July, with the South African Revenue Service (SARS) announcing one significant change in the form of auto-assessments for local taxpayers.

To that end SARS says it has auto-assessed over 3 million individual non-provisional taxpayers and that they will not have to file a tax return if they are satisfied with the outcome.

“In line with our strategic objective to make it easy for taxpayers to comply, we have conceptualized the Auto Assessment initiative – we identified a large segment of non-provisional taxpayers who are typically taxpayers in formal employ who receive salaried income and have deductions like retirement annuity- as well as medical aid contributions,” explained the Revenue Service in a media statement last month.

“By using 3rd party data received from employers, pension fund administrators and medical aid schemes, SARS was able to complete the tax declaration on behalf of this segment of taxpayers and issue them with an Auto Assessment,” it added.

While this system is designed to ease the 2022 filing season for many, there are also several implications that local taxpayers should be aware of.

This according to Aneria Bouwer, senior consultant at Bowmans South Africa, who recently shared her insights in an op-ed sent to Hypertext.

“During the 2021 Filing Season, SARS implemented the use of pre-populated income tax returns for many individuals. However, the 2021 process is substantially different from the 2022 process. In 2021, the assessment was not issued until the taxpayer accepted the pre-populated return or made changes and submitted a revised return. One can only assume that this process did not yield the intended results and did not speed up the assessment process to the extent envisaged,” she posits.

Here, Bouwer highlights some of the key differences between the current filing season and last year’s one.

On this front the senior consultant notes that should the taxpayer fail to submit a revised return within 40 business days, the assessment will become final. This is unless SARS grants an extension for the submission of the revised return or unless the taxpayer submits an objection.

“The fact that taxpayers are afforded 40 business days to issue a revised return, seems to indicate that auto-assessments are being issued in terms of section 95 of the TAA (Tax Administration Act, 2011). However, can it be said that a taxpayer did not submit a return if it did not have sufficient (or any) time to submit a return before an auto-assessment was issued?,” she queries.

“Also, section 95(4) states that the making of an assessment does not detract from the obligation to submit a return, while the SARS Media Statement states that ‘if a taxpayer is satisfied with the auto assessment, they don’t have to do anything further and the process terminates at this point’,” Bouwer points out.

So what is the issue at the end of the day, especially as SARS is seemingly doing a lot of the leg work for taxpayers who simply may not be interested in doing the admin to file for the current season?

According to Bouwer, the problems here revolve around any potential holes in communication with taxpayers and ensuring the correct details have been captured.

“All is well if the return contains the correct information and/or if the taxpayer receives the notification of the auto assessment and is able to timeously submit a revised return. However, the problem arises where some information is missing,” she notes.

“For example, according to media reports, SARS has disallowed 60% of the home office expenses claimed in respect of the 2021 tax year. Information regarding these types of expenses will obviously not be available to SARS for the purpose of an auto assessment, which means that the taxpayer would have to submit a revised return within 40 business days. The same applies should the taxpayer have received income that is not included in the auto assessment,” she continues.

While an auto-assessment is indeed helpful for those wanting to avoid the admin required for the 2022 filing season, it is important for every taxpayer who is auto-assessed to check the details that SARS has on hand. This especially if an issue were to arise down the line.

As such, you should not take the auto-assessment as gospel, despite how handy it is.

[Image – Photo by Towfiqu barbhuiya on Unsplash]


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