With the filing season getting underway today, the South African Revenue Service (SARS) has made significant changes to the 2022 tax filing season.
The filing season, which opens during the first week of July, includes all categories of individual taxpayers, provisional and non-provisional, as well as trusts.
"SARS has made significant changes to the 2022 tax filing season. This year, over 3 million individual non-provisional taxpayers, have been auto-assessed by SARS and will not have to file a tax return if they are satisfied with the outcome."
In a statement on Wednesday, SARS said the introduction of auto-assessments, among other enhancements this year, is in line with its journey of building a smart, modern revenue service with unquestionable integrity and is trusted and admired by all.
"Technology, the use of data, artificial intelligence and algorithms have enabled SARS to make it easy and seamless for most individual taxpayers to comply with their legal obligations. All these innovations support our strategic objective of providing clarity and certainty to help foster a culture of voluntary compliance," it said in a statement on Wednesday.
At the same time, the use of technology and data has also enabled SARS to significantly sharpen its capability to detect non-compliance and to make such non-compliance hard and costly.
"SARS will impose understatement penalties to taxpayers who deliberately attempt to claim impermissible expenses or understate their income, as well as administrative non-compliance penalties to those taxpayers who do not adhere to the applicable deadlines of this filing season.
"Taxpayers should be aware that SARS has access to various sources of data, which enables us to track economic activity and verify the completeness and accuracy of tax declarations."
An understatement penalty (USP) is a penalty charged of up to 200% where SARS or the fiscus suffered prejudice as a result of: failure to submit a return; an omission from a return; an incorrect statement in a return; if no return is required, the failure to pay the correct amount of tax, or an impermissible avoidance arrangement.
Meanwhile, an administrative non-compliance penalty is a penalty of up to R16 000 per month for every month that a tax return remains outstanding.
Auto assessments
In line with the strategic objective to make it easy for taxpayers to comply, SARS has conceptualised the auto assessment initiative. SARS has identified a large segment of non-provisional taxpayers who are typically taxpayers in formal employ, who receive salaried income and have deductions like retirement annuity, as well as medical aid contributions.
By using third party data received from employers, pension fund administrators and medical aid schemes, SARS was able to complete the tax declaration on behalf of this segment of taxpayers and issue them with an Auto Assessment.
The steps in the auto assessment process will work as follows:
From the 1st of July, SARS will communicate directly with affected taxpayers by SMS and/or email, notifying taxpayers of their auto-assessments.
If there is a refund due to the taxpayer, it will be paid directly to the taxpayer's bank account within 72 business hours after the notification. If there is money owing to SARS, it must be paid to SARS' Bank Account, eFiling or through the MobiApp by the stipulated date.
Taxpayers can access the auto assessment through any of SARS's channels, such as the SARS MobiApp or SARS efiling, to review and verify the completeness and accuracy of the information that resulted in the auto assessment.
If a taxpayer is satisfied with the auto assessment, they don't have to do anything further and the process terminates at this point.
If the taxpayer finds that there is missing and/or inaccurate information, pertaining to either income or expenses, which may have affected the outcome, it must be declared to SARS within 40 business days of the auto assessment notification by submitting a tax return to SARS.
Risk screening
For all auto assessments issued, SARS has performed the necessary risk screening and unless a taxpayer submits a return, no verification, audit or recall process will be initiated by SARS. In exceptional cases, banks may flag risks to SARS, which will be communicated to the taxpayer.
For all returns submitted by taxpayers, the normal SARS risk-screening process will apply. This may initiate a verification, upon which SARS will request taxpayers to submit supporting documents to substantiate the information declared on the tax return.
Revised assessments for returns submitted
Where taxpayers submitted a return, thus indicating that they are not in agreement with SARS's auto assessment, SARS will process the return and issue a revised assessment, which may result in a different financial obligation e.g. reduced refund, increased refund or payment due to SARS.
Objections and appeals
If not in agreement with the revised assessment, a taxpayer can initiate an objection, through the normal SARS objections process.
Non-provisional taxpayers who did not get an auto-assessment and who are required to file a return can do so from 1 July 2022 up until 24 Oct 2022.
Provisional taxpayers, as well as trust submissions, can start with filing a return from 1 July 2022 until 23 January 2023.
Innovation
"Auto-assessments is a key innovation designed to improve SARS's service offering to taxpayers. It follows the principle that the best service is no service and will allow SARS to explore the possibility of eventually having no Filing Season, as we have come to know it," said SARS Commissioner Edward Kieswetter.
He said the revenue service will spare no effort in collecting all revenue due to the State and provide a world class service to taxpayers.
"This will enable government to provide basic services to vulnerable individuals and households, including the payment of old age grants, as well as the provision of education and health care services," he said.
Taxpayers urged to not visit SARS offices
Meanwhile, SARS urged taxpayers to wait for the email and SMS, and not to visit SARS branches during the first week of July. Those who still prefer to visit SARS branches are reminded to please make a booking on the appointment system to ensure an efficient service experience.
This can be done either by sending and SMS to 47277, with the word "Booking" (Space) ID number/Passport number/ Asylum Seeker number, or going to the SARS website (www.sars.gov.za) and clicking on the "Book an Appointment" icon.
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The revenue service urged tax practitioners to strictly use their channel when booking an appointment.
Taxpayers can also use the SMS number 47277 to request a tax reference number, find out if they need to submit a return and get a statement of account.
Enhancing services to taxpayers
SARS is working hard to continue to enhance its service to taxpayers by adding more digital offerings in order to enable taxpayers to transact with SARS without visiting its branches. This includes its online digital offerings such as eFiling, the SARS MobiApp, the above-mentioned SMS service, the SARS website and the SARS Contact Centre.
In addition, the revenue service reminded taxpayers that it is a criminal offence not to file a tax return, or to make a declaration that is inaccurate or incomplete.
"We reiterate that SARS will impose penalties for both late, as well as inaccurate/incomplete, declarations. Pursuant to our strategic objective of working with and through our stakeholders, SARS has had multiple engagements with various associations, including recognised controlling bodies, in order to ensure that tax practitioners understand the changes being implemented this year, including the ones related to auto-assessments."
In addition, SARS extended its appreciation for the efforts of employers and third-party data providers, who have met their 31 May 2022 submission deadline.
SARS issued a stern warning to those employers and third parties who are non-compliant, that the organisation will pursue them, as is permitted in law.
