SARS AUTO ASSESSMENT
By Probity Advisory (Pty) Ltd (Ashley Mhona (Tax Consultant) and Dr Gerhard Nienaber (Tax Director))
What is the SARS auto assessment?
Conventionally, every tax year a taxpayer must submit a return to the South African Revenue Service (SARS). Upon submission the taxpayer receives an assessment from SARS in which SARS either indicates a taxpayer’s tax liability (or refund) that matches the declaration of income and deductions made on the tax return or requests the taxpayer to submit supporting documentation in order for SARS to verify the declarations and confirm or alter the tax liability (or refund).
The new SARS auto assessment is the reverse of the conventional method. SARS issues an assessment to a taxpayer for the tax year indicating the tax liability or refund without the taxpayer having submitted a tax return to SARS. How does this work exactly? – SARS has access to information which a taxpayer would normally use to complete their tax return such as information from employers (for example IRP5s indicating all the cash and non-cash benefits provided to the employee and the amount of tax withheld on the benefits by the employer), information from financial institutions, medical schemes, retirement annuity fund administrators and other third-party data providers.
The SARS auto assessment process was an expanded in response to the government’s mandate of social distancing during the COVID-19 pandemic, as it is aimed to reduce the number of taxpayer visits to SARS’ branches for submission of their tax returns.
Will everyone receive an auto assessment?
The current tax year that SARS will be assessing is the 2022 tax year for individuals which runs from 1 March 2021 – 28 February 2022.
The SARS auto assessment will not be issued to everyone, neither will it be issued to companies or trusts. The auto assessment will be issued to individuals selected by SARS, the selection will not be an indication of prejudice or preferential treatment. The selection is likely based on the individuals SARS can more accurately assess, such as employees with one income stream or persons that are not independent contractors.
What happens when a taxpayer receives an auto assessment?
SARS will notify a taxpayer of their auto assessments per SMS. The message will include a link to eFliling or SARS MobiApp, to allow the taxpayer the option to either accept or edit the assessment.
If a taxpayer agrees with all the income and deductions raised, and the subsequent tax debt or refund on the auto assessment, they can “accept” the return, and this will mean that the taxpayer will not be obligated to submit another tax return to SARS for the tax year. Upon acceptance, if the taxpayer owes money they must proceed to make a payment on eFiling, via EFT or the SARS MobiApp by the specified due date on the Notice of Assessment. If a refund is due to the taxpayer, SARS will pay out the refund.
However, it is important to note that if a taxpayer does not agree with all the income and deductions raised, and the subsequent tax debt or refund on the auto assessment, they can opt to “edit” the return, and this will mean that the taxpayer will have to file their return on eFiling or the SARS MobiApp.
What happens when a taxpayer does not receive an auto assessment?
The auto assessment will not be issued to everyone, for persons that do not receive an auto assessment, they must submit their tax returns to SARS in the customary manner of completing an Income Tax Return (ITR12).
Ashley Mhona (Tax Consultant) and Dr Gerhard Nienaber (Tax Director) – Probity Advisory (Pty) Ltd