Auto-assessments don’t reduce your obligations to Sars
For taxpayers whose finances are relatively straightforward, the South African Revenue Service (Sars) has introduced the auto-assessment process. Although auto-assessment may relieve you of the tedious administrative work needed to complete your annual tax return, it does not remove your obligation to ensure that everything on the return is correct and that all information relevant to your income – and tax deductions – for the 2019/20 tax year has been included.
Last week, the Commissioner of Sars, Edward Kieswetter, updated the media on the 2020 filing season, which has the theme #YourTaxMatters.
Somaya Khaki, project director for tax at the South African Institute of Chartered Accountants, says the commissioner emphasised that part of the reason for changing the filing season deadlines was to allow Sars to implement the auto-assessment process, “whereby Sars will rely significantly more on third-party data to assess more than three million individual taxpayers”.
Khaki says some of the thinking behind the process is to:
- Promote social distancing by creating a mechanism whereby taxpayers will be able to fulfil their obligations from home, minimising contact with Sars agents;
- Assist taxpayers by making compliance easier, thanks to the auto-population of information and related tax assessment, which they can accept at the push of a button; and
- Identify non-compliant individuals who have either been negligent or have “acted with criminal intent” by not submitting returns or not fully disclosing their income on their returns.
According to Sars, if you are being auto-assessed, you should receive an SMS with the auto-assessment result some time this month – you may have already received it.
Khaki says: “You then have to access the Sars MobiApp or eFiling and either accept or reject the assessment based on a return that Sars will have populated using data received from employers, financial institutions, medical schemes and other third parties.”
Carrie Norden, tax manager at Allan Gray, says you may have to edit your return to include more information, in which case you should not accept your auto-assessment and will need to wait to file from September 1.
“It is important to check that all the third-party information that Sars has on record for you displays correctly on your tax return before you accept your auto-assessment. This means you need to carefully check your tax certificates from your employer, medical scheme and investment managers and compare these to your auto-assessment.
“You may have additional deductions to claim or income to report that has not been pre-populated on your return. For example, you may have earned rental income or incurred medical expenses which were not on record with your medical scheme,” Norden says.
Rob Hare and Aneria Bouwer, tax specialists at law firm Bowmans, say although Sars’s use of third-party data to generate auto-assessments should ease your administrative burden, as well as reducing Sars’s collection costs and freeing up resources, it is still your responsibility to review your auto-assessment and ensure that it is correct in all material respects.
“Taxpayers are also responsible for communicating with the relevant third parties in the event that any third-party information is incorrect,” they say.
“We therefore recommend that taxpayers ensure that they have received and carefully reviewed their IRP5/ IT3(a) certificates and all other tax certificates, such as medical scheme certificates, retirement fund certificates, and IT3(b)s from financial institutions, so that any discrepancies can be rectified as quickly as possible.”
If you are not auto-assessed
If you are not auto-assessed by Sars, it may be that Sars does not have enough third-party information to populate your return. But it may also be that you fall under the threshold of needing to submit a return or even of paying any tax at all.
Norden says: “You are only liable to pay income tax if you received taxable income (income after exemptions and deductions have been applied) of more than a specific amount, known as the “tax threshold” amount, for the tax year.”
For the 2020 year of assessment, the tax thresholds are:
- R79 000 for individuals younger than 65;
- R122 300 for individuals of 65 or older, but younger than 75; and
- R136 750 for individuals of 75 or older.
Norden says you do not have to file a tax return if your gross income consisted only of one or more of the following categories:
- South African interest income (not from a tax-free investment) not greater than R23 800 for individuals younger than 65 or R34 500 for individuals of 65 or older;
- Amounts received from a tax-free investment; and
- Up to R500 000 of gross salary income from only one employer and the employer deducted PAYE tax.
Those not subject to the auto-assessment process or who need to revise their assessments will be able to file their returns from September 1, subject to the following deadlines:
- October 22: filing in a SARS branch;
- November 16: eFiling or MobiApp; and
- January 29, 2021: provisional taxpayers filing via eFiling.