During SA Revenue Services’ (Sars) current auto assessment season, it is useful to remember that a refund is paid (within 72 hours of the auto assessment) before the taxpayer has a chance to check the data on which the assessment was made.
Sars began this season’s auto assessments on Friday, and the process elicited some concern among consumers, expressed also on Twitter, with some questioning whether it would be wiser not to spend a refund, at least until the data upon which the rebate was made, is checked.
With respect to refunds, one of the changes implemented last year was to remove the ‘Accept’ or ‘Reject’ options on the auto assessment.
The refund is now paid (72 hours) before the taxpayer even has a chance to check. The taxpayer now only has the option to ‘Edit’ and if they do nothing, the assessment is considered to be ‘accepted’.
The South African Institute of Chartered Accountants (Saica) said in response to Business Report questions that, given that one has until October 23 to check and submit a revised return if necessary, paying the refund within 72 hours of auto-assessment does seem premature as the taxpayer may still make changes resulting in a higher or lower refund.
“Additionally, if Sars subsequently receives/finds other information that results in a verification and/or re-assessment resulting in a lower refund or a tax liability, the affected taxpayer would have to repay what they thought was ‘their money’. If they have already spent the funds, it creates a collection problem for SARS, but obviously also a legal issue for the affected taxpayer and they may even need to pay a tax practitioner to assist them with engaging SARS in this regard.”
Saica said that it had asked Sars to consider reverting to the ‘Accept’/’Reject’ functionality of last year, but this proposal was not accepted.
Some taxpayers may assume the information used by Sars is 100% accurate and complete (trust in Sars data), and may accept the refund as correct, even when it isn’t.
“Whilst Sars has not communicated that refunds may be incorrect, Sars does communicate that as soon as a taxpayer receives an auto assessment, they must login to eFiling and view the data used to generate the assessment,” Saica said.
If the taxpayer disagrees, they must request the return, edit and submit by the relevant due date.
If the third party submitted incorrect data that was then used by Sars to pre-populate the return, the taxpayer must communicate with the third party requesting that they resubmit the correct data to Sars and the taxpayer can then refresh the return,.
Sars says it is the taxpayer’s responsibility to ensure the information in the estimated return which is used to generate the auto assessment, is accurate and complete.
Sars had not responded to BR’s emailed questions at the time of publication.
“If Sars subsequently identifies omissions or incorrect data, the taxpayer would be liable for any additional tax due or refund that has to effectively be ‘repaid’. Of course, it could go the other way, with Sars owing the taxpayer a bigger refund as the Sars auto assessment may not have considered all the expenses that the particular taxpayer was allowed to claim,” Saica said.
“Intentional omission of income is likely to be viewed by Sars as tax evasion, with harsh consequences,” Saica said.
Previously, when the auto assessment process was first introduced, the taxpayer had to physically choose the ‘Accept’ option on eFiling and the assessment would only be ‘final’ at that point. The refund would then be paid within sevena days of the taxpayer accepting the assessment. This gave taxpayers the opportunity to review the information before payment of the refund.
“When we raised these concerns with Sars, the view seemed to be that Sars wants to ensure that taxpayers get their refunds quickly – as taxpayers complain when there are delays – and that the majority of refunds would be correct,” Saica said.
“This is likely based on statistics in terms of how many people actually edit their returns.
For those taxpayers who do need to edit, this creates many issues as they may need to pay Sars back.”