The South African Revenue Service (Sars) is taking steps to reduce the number of taxpayers who visit its branches unnecessarily and clog up the system.
The 2018 tax season, which starts on July 1, will be 18 business days shorter than usual to allow more time for verification prior to the December holiday period. As a result, most individual taxpayers will have to submit their returns by October 31, 2018.
Below are some important information and changes related to filing season that taxpayers need to be aware of:
1. Not everyone has to file a tax return
Acting Commissioner Mark Kingon says Sars has sent personalised and direct communication to taxpayers who may not have to submit a tax return, based on information submitted during the 2017 tax season.
In 2017, 1.6 million people filed returns even though they didn’t have to, with many visiting a branch to do so.
A taxpayer does not need to submit a return if their total employment income or salary before tax for the year of assessment (March 1, 2017 to February 28, 2018) was no more than R350 000; if their employment income or salary was received from a single employer and they have no other form of income (such as a car allowance, company car fringe benefits, business income, taxable interest, rental income or income from another job); and if they don’t want to claim additional deductions or rebates (for example, medical costs that the employer hasn’t taken into account, retirement annuity contributions or travel expenses).
2. Sars will introduce an auto-assessment pilot programme
Sars will be running a pilot to auto-assess taxpayers with a view of issuing assessments to taxpayers who do not need to submit returns in future.
According to Kingon, Sars would in future like to issue assessments specifically to the segment below R350 000 so they know the result and need not go to a branch.
If successful, Sars could effectively prevent nearly a million people from going into its branches.
The veracity of the results will be checked and would lead to improvements in future tax years, says Kingon.
3. Tax returns for the current year of assessment will take priority
Tax returns for the current year of assessment will take priority over outstanding returns filed for prior years.
According to Sars, experience has shown that the submission of prior year returns poses a risk to taxpayers who are taken in by scammers.
“Where an assessment on one return may reflect a refund due, there may be instances where prior returns may reflect that the taxpayer needs to make payments. These amounts will be offset against each other and the taxpayer will be notified of the outcome.”
4. Verification letters will be more specific
Kingon says verification letters will be more specific in terms of the supporting documents that Sars requires from taxpayers who have been flagged for a specific risk. This will help taxpayers to respond timeously and accurately.
“We will give the taxpayer a far more specific letter where we can, and ask just the information that is needed. So if it is one item – for instance, medical – it’s only that. If it is a retirement annuity – it’s only that.
“We believe that that will assist clients not having to upload lots and lots of documentation. That has been a complaint since we rolled out eFiling in 2008.”
5. Repeat audit cases will be restricted
The Sars risk engine is not static, says Kingon.
“We’ll continue to refine the risk engine to specifically limit repeat audit cases where no risk was found in previous years. We believe in that regard we can reduce the volume of work that is being done.”
6. Dormant companies don’t have to file returns
While not directly linked to the filing season for individuals, Sars is also seeking to reduce the burden of filing other returns.
Until now, dormant companies – even those with no assets or income – had to file returns.
Kingon confirms that this will no longer be required. Specific criteria have been set out in the Gazette.
7. The long-awaited Service Charter will be released by July 1
The Service Charter – which sets out the minimum levels of service and turnaround times taxpayers can expect (also with regard to tax refunds) – has been a bone of contention.
Due to the modernisation of Sars’s processes, the previous charter is no longer valid, but a new version hasn’t been forthcoming despite promises to this effect.
Sars on Monday committed that the updated charter would be released before the start of the tax season on July 1.
According to Fabian Murray, acting chief officer for business and individual tax, the charter has been released to Sars staff internally and shared with the office of the Tax Ombud.
“We have received commentary back, which we are currently reviewing. We believe that the review should be concluded in the next week or two.”
Kingon describes the charter as a “living document” and says that if tweaks are necessary, they can be done.
8. Taxpayers and tax practitioners are encouraged to use eFiling only
During 2017, a total of 120 000 returns were submitted by tax practitioners at Sars branches.
“We are asking specifically that tax practitioners use eFiling only,” says Kingon. “There is no need for them to go and clog our branches.”
The commissioner says the significant number of tax practitioners who visit branches to file was sometimes “a mystery” to Sars, but that he had come across some tax practitioners who were not very computer literate, which was probably the biggest driver behind the trend.
“Some people are still scared of the computer. It is something that we need to get on top of. We believe in this day and age, to not be able to eFile for whatever reason, that’s problematic.”
Taxpayers are also encouraged to file via eFiling on their own. Sars will support eFilers with the Help-You-eFile service, which connects taxpayers to one of its agents in real time.