By Amanda Visser

Nothing in 2020 has been business as usual, and even the annual tax filing season for individuals will be dealt with differently.

This year the South African Revenue Service (SARS) is following a phased approach, with more emphasis on auto-assessments than in prior years.

The auto-assessments will be based on third party submissions to SARS from data provided by employers, retirement funds, medical aid schemes and insurance and financial institutions.

The auto-assessments will enable SARS to reduce the number of visitors to its branches, and thus reduce Covid-19 transmission risks.

SARS is currently validating the third-party data that should have been submitted to it by the end of May.

This information will be used to prepopulate selected taxpayers’ returns. Once completed taxpayers will be notified of the outcome via SMS. They will be able to accept or edit the assessments by using SARS digital platforms – eFiling and the MobiApp.

However, if they do not accept the outcome they will have to submit a return when the actual filing season starts on 1 September.

Beatrie Gouws, head of the South African Institute of Tax Professionals (SAIT), says

taxpayers who feel uncertain whether their auto-assessed tax return is a true reflection of their personal income tax year, should ensure that they get advice from a registered tax practitioner.

Taxpayers must ensure that third party data submitted to SARS is indeed correct. Where information is incorrect, the third party, and not SARS, needs to be contacted to correct the errors.

The third party return will have to be amended first and resubmitted to SARS before the auto-assessment will be updated by SARS. Taxpayers should contact the relevant third party to amend these returns and resubmit to SARS.

Joon Chong, partner at law firm Webber Wentzel, says taxpayers who are selected for auto-assessments, but have expenses that are not reflected on third party returns should not accept the auto-assessment. They should rather file their annual return from 1 September.

Taxpayers should take note of the new filing periods as they are shorter than in prior years.

• Non-provisional taxpayers (generally salaried workers with no additional income or expenses) who will need the assistance of a SARS official at a branch must first make an online booking. They will only have from 1 September until 22 October (last year it was 31 October) to file their returns.
• Non-provisional taxpayers who file through SARS’ digital platforms will be able to do so from 1 September until 16 November (last year it was until 30 November).
• Provisional taxpayers using eFiling will have until 29 January next year.

SAIT says the majority of tax returns that practitioners are responsible for are not suitable for auto-assessments. A SAIT survey shows that 74% of the tax returns their members normally deal with are not suitable for auto-assessments.

“The result is that the time allowed for tax practitioners to submit non-provisional personal income tax returns has decreased drastically,” says Gouws.

Chong says taxpayers who have qualifying medical expenses not recorded on the medical aid certificates should not accept an auto-assessment.

She advises taxpayers to prepare schedules of the expenses incurred and be ready to upload it, together with the documents (such as invoices) showing proof of the expenses.

Individuals with other revenue streams in the year such as rental income or losses, interest and dividend payments should also file their returns reflecting the income and expenses (for example maintenance of the rental property).

Other expenses that could make a difference in a taxpayer’s tax liability, that would not necessarily be reflected by third party data, include donations to public benefit organisations, capital gains or losses that have not been captured and taxpayers with travel or home office expenses.

Chong remarks that these taxpayers will probably not be selected for auto-assessments based on their historic returns submitted. She adds that due to the earlier deadlines taxpayers and their practitioners should prepare their returns sooner rather than later.