Examine your Sars auto assessment before accepting it

Sars assumes you accept the assessment unless you choose to ‘edit’ it; verify details as you’re liable for mistakes or omissions: Somaya Khaki, Saica.

NZINGA QUNTA: The South African Institute of Chartered Accountants [Saica] is encouraging taxpayers to carefully examine their auto assessments from Sars before treating them as correct. Somaya Khaki, who is project director for tax at Saica, joins me. A very good evening to you, and thanks so much for your time tonight. Just explain the auto assessments to us, and what’s new about them this year.

SOMAYA KHAKI: Good evening Nzinga, and thanks for having me. In terms of the auto assessments this is something that Sars introduced a couple of years ago in the filing season, but this year for the first time Sars was treating these auto assessments as original assessments. In terms of that, from a practical perspective, what this actually means for those individuals receiving auto assessments is that Sars has actually taken away the button to ‘accept’ or ‘decline’ the auto assessment.

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So at the moment the way it works is that if you receive an auto assessment you can just go into the eFiling system. If you are happy with what you see, then you can immediately log off and move on with your life. In the prior year the taxpayer or their tax practitioner, if they were using one, would look at the auto assessment and have to either accept, or click the option to decline that auto assessment. If they declined, they’d need to submit the return.

So basically what’s changed, or what the taxpayer would see as the change coming through, is that there’s no longer that option to accept. There is an option to ‘edit’ a return, which would be similar to the ‘decline’ option that we would have seen in the past.

NZINGA QUNTA: Somaya, why are you asking people to not assume that Sars is correct?

SOMAYA KHAKI: I think some of the messaging that ordinary taxpayers may have seen coming from Sars may have created some kind of misconception in some taxpayers’ minds if they’re not a hundred percent familiar with how the law actually works. But I would hope that all those taxpayers who received the auto assessment would also have received a fact and information or fact sheet from Sars, explaining how the auto assessment works in the current year, and explaining what taxpayers would need to do or what action they would need to take when they receive an auto assessment.

Somewhere in that fact sheet Sars does say that if you have received an auto assessment you wouldn’t be subject to a verification or review.

A verification would be – when you submit a tax return, Sars would run it through their risk engines and if they identify any potential risks or areas of risk in that return, they would request supporting documentation from the taxpayer to verify certain information disclosed in the return.

But with respect to auto assessments, what Sars [is] saying is that for those receiving [one], Sars has already run it through their risk engines. They’ve already validated the information that they’ve received from third parties, and they’ve quality-checked the information. So they’re happy that the information or the data that they’ve based the auto assessment on is actually correct.

However, they do go further on in that information sheet to say that the taxpayer is required to check that the information used to populate that auto assessment is actually correct, because there could be missing information in there. There could be information that has been incorrectly populated, [which] doesn’t agree [with] what the taxpayer thinks it should be.

Also just remember that auto assessment, or how Sars derived the data for those auto assessments, is that they rely on the returns that are submitted by third parties, like your employers, medical aid, retirement funds, financial institutions, etc. If they didn’t submit some information, that wouldn’t have been populated. So it’s very important that taxpayers actually check the information because ultimately the taxpayer is still responsible for what is in that auto assessment.

And the way Sars has done it this year is that they’ve created what is called a ‘Sars estimated return’. I’m not sure if you’ve seen this on your own eFiling, if you’ve received one, but if you look at the returns page there’s an ‘estimated return’ that Sars has submitted in order to generate this auto assessment.

You can actually go in and open that estimated return and check the information that’s been used to populate the return.

For the first time this year Sars has made available the third-party certificates on the eFiling profile of taxpayers, where you can actually go and search for certificates for whichever tax year they’ve noted [them] for.

You can check the certificates against what you received from your employer or your medical aid, etc – if you have received such – and then you can compare [them with] what Sars has actually put into the return.

The reason why we saying it’s so important to do this, as I mentioned just now, it is the taxpayer’s responsibility ultimately to make sure that there are no omissions or incorrect information in the assessments because, if there are and Sars detects this later on – let’s say you’ve gone in, you’ve seen your auto assessment and you said, well, Sars says it’s okay, they’ve quality-checked it, etc, let’s move on with our lives, I’m going to get a refund and I’m happy, let’s move on – I would say go back and check that everything is a hundred percent correct because later on, as I said, if Sars detects it, they could hold the taxpayer liable for not completing the correct information in the return.

And also, if taxpayers don’t disclose to Sars other information that Sars wouldn’t necessarily receive from third parties – for example if they’re getting rental income that they haven’t told Sars about, or they are running a side trade that they haven’t disclosed to Sars; maybe it’s the first year that they’ve engaged in this kind of trade and Sars wouldn’t have been aware of it at the stage when the auto assessment was populated – if Sars does find out later on, and they do have ways and means of finding information, then the situation could be even worse for the taxpayer, because it’s not just as simple as a simple omission. It could be an intentional omission, in which case Sars could then hold them liable for tax evasion.

NZINGA QUNTA: Somaya Khaki is a project director for tax at Saica. Thanks so much, Somaya, for your insight in explaining those processes to us – how Sars does those auto assessments, where they get the data, and most importantly the taxpayers taking responsibility for what they see, even on Sars’s side. Thanks so much for that.

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the gap in the system is that they don’t adequately deal with people that worked for part of year or had large medical issues. Other than that and a few obscure sidewinders it should save a lot of admin. The US has self assessed for decades. My daughter emigrated and worked for part of the year so a bit complicated. We’ll need some help figuring this one

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