Article by: Stamford Hill Accountant: Mlondi Shandu
Make sure you know the risks and how it may affect your tax refund
What is an auto-assessment?
This is an automatic assessment issued by SARS to a number of taxpayers. SARS uses data collected from employers, financial institutions, medical schemes, retirement annuity fund administrators and other 3rd party data providers to generate the assessment automatically, without any input from the taxpayer.
Why did SARS introduce this process?
This process was started in 2019 to speed up the filing process – it was then expanded on during the Covid-19 pandemic to encourage physical distancing.
How will I know if I have been auto-assessed?
You should have received an SMS from SARS informing you that you had been selected for auto-assessment. SARS would have issued correspondence named “autoassessment notices” between 01 July 2024 and 14 July 2024.
Are deadlines for auto-assessments the same as the normal tax season?
No, if you don't agree with the auto-assessment and want to file a “traditional” return, you have just 40 working days (from the date of the assessment) to do so.
What happens after 40 working days if I do nothing?
If you take no action, the auto-assessment will become your FINAL assessment after 40 working days.
What if the 40-day deadline is too short? What can I do?
Request an Extension on eFiling, before the 40 working day deadline has expired. You will need to give SARS 'reasonable grounds' as to why an extension is required. If you miss the deadline, you will have an additional 21 working days to submit a Request for Extension on the same terms.
More than 61 working days have passed. What can I do now?
Once 61 working days have passed since you received your auto-assessment, you won't be able to file a tax return unless you can provide ‘exceptional circumstances’ to justify a delayed request for extension.
Should taxpayers accept the auto-assessment?
No, there are risks involved. Your auto-assessment may be inaccurate and accepting it, could result in you paying more tax than necessary.
SARS may not have received all of your tax certificates.
SARS may not have your most up-to-date tax certificates.
You may miss out on claiming certain deductions, which won’t appear on your auto-assessment e.g. wear and tear, donations to charities, travel expenses, home office and medical expenses you paid personally.
If I reject the auto-assessment, what happens next?
You can file your tax return as normal. Filing a tax return means that you can include all of your possible deductions so as to pay less tax and maximize your chance of a refund.
If I accept it, and my autoassessment is incorrect, am I exempt from penalties/legal action?
No, you are not exempt from penalties or legal action. It’s your responsibility to ensure your income and expenses are accurately reported to SARS. If you accept the auto-assessment and you didn’t declare all of your income, SARS could levy a penalty of up to 200% of the tax payable (plus interest!) should they audit you later and discover their own mistake.
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