The South African Revenue Service (SARS) says it will be assessing a significant number of non-provisional taxpayers automatically in August 2020, using third party data.
These taxpayers will receive an outcome via an SMS which will direct them to eFiling or the SARS MobiApp to “accept” or “edit” the outcome.
An auto-assessment which is not specifically accepted, edited or rejected by the taxpayer will automatically be filed on 29 January 2021 if the third party data used to generate the assessment is correct and complete.
“The auto-assessments issued to taxpayers are based on third party returns provided to SARS such as those provided by employers, retirement funds, medical aid and insurance schemes, and financial institutions,” said Joon Chong, partner at Webber Wentzel.
“The auto-assessments will be completed with information on the retirement funds and medical aid certificates, IRP 5 employee certificates, and IT3b and IT3c certificates for interest and dividends received, and capital gains or losses from investments.”
Taxpayers should note that if any amounts on their third party returns are not correct, and the auto-assessment reflects the same incorrect information, the third party return will have to be amended first, and resubmitted to SARS before the tax body can update the auto-assessment, Chong said.
She added that taxpayers should contact the relevant third party to amend these returns, and resubmit to the revenue service.
“If the auto-assessments do not reflect the same information on the third party returns, then the relevant third party should also be contacted.
“From what we understand of the auto-assessment process, this scenario is unlikely to happen as the same information on the third party returns should pull through to the auto-assessments.”
Chong said that taxpayers should reject the auto-assessments and should rather file normal ITR12 returns if they:
- Have qualifying medical expenses not recorded on the medical aid certificates where they can claim the section 6B additional medical expenses tax credit. These would be, for example, qualifying medical expenses incurred by the taxpayer for themselves and dependants in the 2020 year of assessment. Taxpayers should prepare schedules of the amounts incurred and be ready to upload these schedules, together with documents showing proof of the expenses, such as invoices, if their ITR12 returns are selected for verification;
- Have other revenue streams in the year which need to be declared such as net rental income or losses;
- Need to submit logbook claims for business kilometres against travel allowances;
- Have made donations to public benefit organisations which allow them to claim section 18A deductions;
- Have capital gains or losses from disposals of assets in the year which are not recorded in the IT3c certificates.
“The above declarations, income, exemptions or deductions are not reflected on third party returns,” said Chong. “These taxpayers will probably not be selected for auto-assessments by SARS, based on their historic returns submitted.”