Auto-assessments for Individual Income Tax returns

A question that we at PRSM are receiving often is what to do about having received a SARS auto-assessment; often accompanied by a tax refund. 2023 Tax Season has begun - as of July as usual - and many individual tax-payers have been receiving these notifications from SARS…

Quick answer: it may be ok, but you need to be careful. This is no shortcut or easy-way out from your own tax due diligence…or you risk facing the consequences - ranging from being wronged to risking legal prosecution later. Read on…

Auto-assessment: SARS have continued to (steam)-roll out their auto-assessment process, taking it to ever-further levels across the tax-base. Where it lands is that if SARS suspects that your tax situation is straight forward and that all required tax documents are already in their possession then they issue an initial assessment (and in some cases even pay out calculated tax owed to taxpayer).

It sounds amazing…so easy…so why not just leave it at that? For 3 important factors:

Losing potential tax claims;
You take full responsibility for the contents and correctness of that tax return, but you are letting SARS do it for you!;
If you have been self-assessed and are not aware, it is binding on you - so you had better go check!

The First point

should be quite apparent if you have been careful with your submissions each year and ensuring to not "pay Caesar" any more than is due - by claiming all due credits and deductions. If you let SARS bypass this process you will not be able to claim what is rightfully yours.

The Second point

is not so obvious and is a snake hidden in the grass that you best be aware of.

When you submit, or accept, a tax submission to SARS, you are legally binding yourself to the correctness thereof: that everything is correct and that no income source is missing etc…

At the bottom of the Individual Income Tax return (yes, including the ones that SARS completed automatically on your behalf) it contains this declaration that you are agreeing to:

"I declare that:

• The information furnished in this return is true and correct in every respect; and

• I have disclosed in full the gross amounts of all income accrued to or received by me during the period covered by this return; and

• I have the necessary receipts and records to support all my declarations on this form which I will retain for inspection purposes"

Quick basics to check:

Make sure you did not receive any income that you did not receive a tax certificate for, eg: rental income, commission, donations, any trade income (where you sold any goods or services to anyone) - this needs to be declared and you would be acting illegally by accepting SARS assessment.
Ensure all income streams/sources have been accounted for (incl bank interest) - SARS or the 3rd party could miss something or make an error (but you are responsible).
Check every entry from every tax document you have received to ensure all entries match.
Ensure your personal details are all correct.

So if you have done the checks and are happy it is correct then: great! Accept SARS return and forget about it (oh, do please export and save it because there have been cases where SARS has lost records and then accused taxpayers of not having submitted returns that were submitted).

More detailed walk-through of the process:

The first thing you see is on your home screen: SARS advising you that you have been self-assessed.

Click on the view button and you may be greeted by this screen (due to imperfect tie-in between your browser and your pdf reader):

If you click on Open it will download the pre-assessment document for you to look at, called an Assessment Summary Notification: which does not exist in tax legislation, hence I advise skimming through it and then throwing it away.

But 4 quick take-outs from that form:

The Header will say something like this:
The South African Revenue Service (SARS) has raised an original assessment based on estimate, for tax year 2023, and this assessment summary tax result -xxxx.xx is based on the information readily available to SARS. Balance of account after this assessment is -xxxx.xx. Below are your bank account details currently at the disposal of SARS. Any refund due to you will be paid into this account.
The 2 buttons on the top are the important ones:
"View Return" will show you the tax return that SARS has submitted on your behalf. This is the crucial document that you need to check.
"View Assessment" is equally important because that will show you how SARS dealt with the details of your tax return and what your tax outcome is.
The Notes at the bottom give some background and guidance, about where they got their info from and what to do now…
The disclaimer beneath that, however, is maybe the best read on the document and should give any prudent person pause:

Disclaimer

- This assessment summary is based on information at the disposal of SARS as at the date of this notice, and it is only applicable to the year of assessment stated above.

- Should you disagree with the information or there is any additional information that is not reflected in this notice, it is your responsibility to declare this information to SARS by selecting "Edit Return."

- You are not relieved from your obligation to inform the Commissioner, by way of submitting provisional tax returns (IRP6), when you become liable for provisional tax.

When you click on the "View Return" button you will get this message (always wise to read what you agree to before clicking "OK":

…which means that SARS takes no responsibility for what has been put on your return from eg a bank or a Collective Investment or an employer, and it could potentially change if a correction is processed.

Then for the final of the 3 points/risks I mentioned at the start:

For those individuals who don't usually file a tax return:

You might have been self-assessed, and not be aware, esp if your contact details have not been updated on the SARS system.

You could have a declaration that SARS has made on your behalf.

At least individuals do not need to press accept anymore…getting late penalties because they where unaware. But it is at least as equally terrifying that SARS will press the OK button for you when the deadline comes (this date has been pushed out this year to coincide with the non-provisional taxpayers' deadline).

Tax Season 2023 overview:

SARS.gov.za shares this information:

Income tax return filing dates
Here are the dates and criteria for the 2023 Filing Season:

Individual taxpayers (non-provisional): 7 July 2023 @ 20:00 to 23 October 2023
Provisional taxpayers: 7 July 2023 @ 20:00 to 24 January 2024

If you have not been self-assessed and try generate your tax return now, you will get this message:

Who needs to submit a tax return:

Anyone that has something to claim from SARS, or
has earnings not supported by a tax-certificate, or
If you worked for more than 1 employer in the past year, or
received an allowance on your IRP5 (eg travel), or
meet SARS' other criteria at this link (which can mostly be relied upon):

https://www.sars.gov.za/types-of-tax/personal-income-tax/do-you-need-to-submit-a-return/

PRSM’s Tax Services

So what do we do here at PRSM for our clients that our auto-assessed:

We carry out our regular tax submission processes as we always do:

Preparation and calculation

We collate all of your documents, make sure that they make sense and are correctly made out (incl. amounts, periods, deductions, source codes);
We load all of this into our customised-client-template which calculates what tax you should be paying or receiving back, and compares this to your previous submissions too.

Then we edit and submit the tax return

Checking and Disputes:

It is our job to not trust, or rely on, SARS:

to get your information right,
to give you what you are due,
to pay you your refund on time.

We ensure that our client's interest are looked after and also that undue risk is removed.

Earnings and Deductions check-sheet examples (what will need to be declared, and what we require if we handle your tax return):

For salary earners (from payslip):

Total gross salary and other remuneration (incl. allowances and Fringe benefits) for this year.
Total PAYE contribution for the year

For business earnings (including trades and property rentals): A schedule/financial report (eg. on our templates) that will give us:

Turnover (total sales)
Deductible business expenses (If you are not sure if it qualifies for deduction, include it and we will assess).
Any PAYE or other tax (including that paid to a foreign country) that was paid against the income.

Total tax-deductible contributions:

Retirement Annuity (RA),
18A Donations,
home-office costs (on our schedule and ensuring you meet the stringent criteria),
motor vehicle details and logbook.

Medical:

Medical Aid (not insurance) contributions & number of beneficiaries (incl. you),
total qualifying (check rules) out of pocket medical expenses (see our schedule)

Capital gains (from sale of fixed property, business-use & other large assets, shares or interest in a business):

supply detail of initial & selling costs,
improvements, and
selling price,
together with all dates (on our template).

Other earnings details, eg's:

interest or dividends from investments (including tax-free investments),
bank interest,
commissions,
competition, and gambling winnings.
Crypto earnings

Any donations made or received.
Any lumpsums or withdrawals from retirement funding policies or employment or other sources
Anything else you think could possibly affect your income situation that we need to be aware of. eg.

divorce,
release of debt
foreign investment, assets, sale of goods or earnings

substantial time spent out of SA over the past year.

If you are a director of a company or member of a CC or have any trade earnings as covered in above points (in your own name and not through a separate business) then we also require the completed schedule of assets and liabilities as at year end (our template).

Yours in tax

Rob Matthews,

General Tax Practitioner (SA)

PRSM

SARS Individual Income Tax auto-assessments and 2023 Income Tax Season