Some of the issues with last year’s automatic tax assessments

Offices of the SA Revenue Service.

Offices of the SA Revenue Service.

Published Jul 12, 2023


Some issues that were cited by the SA Institute of Chartered Accountants (Saica) that occurred with auto assessments last year are listed below.

Whilst some of these issues may be re-occurring, it is still early in the filing season so we are waiting for input from members before we can validate current systemic issues. Once we have validated issues, these will be presented to Sars and Sars would usually investigate and decide on the course of action.

Issues list:

In our opinion, Sars does not emphasise the fact that it is the taxpayer’s responsibility to ensure that the return/auto assessment data is accurate and complete – i.e. while Sars refers to checking the information, there is not enough in the communication to express the seriousness of treating an auto assessment as correct when there are omissions or inaccuracies.

Sars’ intention is that the auto assessment will apply to taxpayers who have less complicated tax affairs – generally salaried employees, who may have additional income sources, but such income is reported to Sars by relevant third parties – for example, the banks would submit details of interest paid to taxpayers and SARS would use this report to pre-populate the relevant individual taxpayer’s return.

However, there have been reports of instances where taxpayers historically reporting other sources/types of income and claiming expenses that Sars cannot pre-populate – i.e. more ‘complicated tax affairs’ are being subject to the auto assessment process, which should not be the case.

There are instances where information is not pre-populated correctly or not at all and on trying to correct and submit a revised return, an error message pops up indicating the return cannot be submitted because the data does not match that which is available to Sars.

If this persists, this could prevent a taxpayer from fulfilling a legal obligation – i.e. to submit a full and true return to Sars by the relevant due date – quite a serious matter.

It is not always clear what triggers this, but what may help is to refresh the data on the day the taxpayer is submitting the return.

It could be that a third party submitted data after that individual’s return was pre-populated and the return needs to be ‘refreshed’ to reflect the additional information. We will be checking with members as to the status of these matters.

We have heard of cases where some third-party information is incorrect or incomplete, but the form on eFiling does not allow editing of the relevant field – for example, the interest income may have pre-populated incorrectly, but the return does not allow the taxpayer to change that information – the field may be ‘greyed out’.

Where third parties do not submit data timeously or the data submitted is incorrect, Sars places the onus on the taxpayer to resolve this with the third party.

Often, this is a struggle for taxpayers. Whilst third parties are obligated to report to Sars – and Sars can take action against third parties if they do not report accurate, complete information timeously – there is no clear remedy for a taxpayer where the third party does not fix the relevant returns.

This process is prejudicial to the taxpayer who is left trying to solve this themselves with both Sars and the third party unwilling to assist adequately.

There are many instances where the taxpayer edits the return and is subject to a ‘manual intervention’, which in the past has taken months to finalise – in some instances more than a year.

In such cases, Sars may issue a letter on eFiling requesting documentation from the taxpayer to assist Sars in validating the information that has been disclosed in the tax return.

Depending on volumes, these verifications can take a long time to finalise. This process delays the assessment which would impact the timing of payment of a refund, if one is due.

There were cases in the past where the taxpayer edited their returns claiming certain expenses, but on re-assessment, the system sometimes ignored this.

One of the positive changes in respect of the current filing season is that with respect to auto assessments, taxpayers who disagree with these now have until October 23 to file a revised return. In the prior year, taxpayers had to submit the revised return within 40 business days of the auto assessment.