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If you are one of the more than three million taxpayers who have received an automatic assessment, you should review your return very carefully before clicking accept.
Non-provisional and provisional taxpayers who file via eFiling have until November 16, 2020 and January 29, 2021 respectively to file returns.
If you have simple tax issues, your automatic assessment may have made your life easier, but Doné Howell, BDO’s tax director, says that when it was first implemented, there have been many mistakes.
Information that you would have previously completed on your tax return is now sent directly to SARS by various third-party providers and not just by your employer. This would now include, for example, your health plan tax certificate, your employer’s IRP5, your retirement annuity (RA) certificate, and your interest certificate. Then, SARS uses this information to pre-fill your tax return.
The idea is that when you receive an SMS from SARS to tell you that you have been automatically assessed, all you have to do is double-check the information you have already filled in and click “accept.”
However, since the automated assessment notices were sent via SMS in August, some taxpayers and their professionals have identified problem areas:
- men correct information provided by third parties
Joon Chong, a partner at Webber Wentzel, cautions that if any amount on your third party returns is not correct, you should contact the relevant third party to amend the information submitted to SARS before the tax collector updates his self-assessment.
Howell says the initial concern is that the end of May was the deadline for third-party providers to submit their data to SARS.
“Between May and July, SARS and external providers had to reconcile the data. In most cases, the information has been accurate, but then there has been a discrepancy between the information sent to SARS and the information sent to the taxpayer after July on their certificates, ”she says.
This mismatch could be a time issue or a matter of needing to update your tax return to get the latest data, he adds.
- You cannot change some of the information that was previously filled in
The section that shows the interest you earned on savings or investments during the year is preloaded and you cannot edit this section.
“For example, we have non-resident taxpayers who were issued certificates of interest from their banks and the bank does not indicate whether the taxpayer is a South African resident or not. In these cases, non-resident taxpayer returns have now been pre-filled with South African interests.
“Neither the tax practitioner nor the taxpayer can reduce that figure or eliminate it. You are only allowed to increase that amount, ”Howell says. This is a problem because, in general, interest received or earned by a non-resident from a source within South Africa is exempt from normal South African tax.
- Insufficient education around self-assessments
While SARS may have made a splash around the new self-assessment process, in many cases it was overshadowed by the news of Covid-19. Notifications alerting taxpayers who had been automatically assessed were sent directly to taxpayers in August via SMS.
“With so many fraudulent scams circulating, many taxpayers ignored the message or had no idea what to do with it. We had hundreds of irate customers who contacted us about these SMS notifications and were frustrated that they were contacted directly when they appointed tax professionals to take care of their tax issues, “says Howell.
At this stage, self-assessment notifications are only sent directly to taxpayers and not to tax professionals.
The 2020 tax season is considerably shorter this year compared to 2019.
“Given the significantly shorter tax filing season for 2020, you should prepare for filing as soon as possible and not wait until the last day to prepare the supporting documents, verify, and submit your returns,” Chong cautions.
