With the filing season beginning today, the South African Revenue Service (SARS) has made significant changes to the 2022 tax filing season.
The filing season, which begins in the first week of July, includes all categories of individual taxpayers, both provisional and non-provisional, as well as trusts.
“SARS has made significant changes to the 2022 tax filing season.” Over 3 million individual non-provisional taxpayers have been auto-assessed by SARS this year and will not have to file a tax return if they are satisfied with the outcome.”
SARS said in a statement on Wednesday that 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 that is trusted and admired by all.
“Using technology, data, artificial intelligence, and algorithms, SARS has made it easy and seamless for most individual taxpayers to comply with their legal obligations.”
“All of these innovations support our strategic goal of providing clarity and certainty to help foster a culture of voluntary compliance,” the company said in a statement on Wednesday.
Simultaneously, the use of technology and data has enabled SARS to significantly sharpen its ability to detect noncompliance and make such noncompliance difficult and costly.
“SARS will impose understatement penalties on taxpayers who intentionally attempt to claim impermissible expenses or understate their income, as well as administrative non-compliance penalties on taxpayers who fail to meet the applicable filing season deadlines.”
“Taxpayers should be aware that SARS has access to a variety of data sources, which allows us to track economic activity and verify the completeness and accuracy of tax declarations.”
An understatement penalty (USP) is a penalty of up to 200 percent charged 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; or, if no return is required, 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 each month that a tax return is not filed.
Automatic evaluations
SARS has conceptualized the auto assessment initiative in line with the strategic goal of making it easier for taxpayers to comply.
SARS has identified a large segment of non-provisional taxpayers who are typically taxpayers in formal employment, receive salaried income, and have deductions such as retirement annuities and medical aid contributions.
SARS was able to complete the tax declaration on behalf of this segment of taxpayers and issue an Auto Assessment by using third-party data received from employers, pension fund administrators, and medical aid schemes.
The steps in the auto assessment process will be as follows:
From July 1st, SARS will communicate directly with affected taxpayers via SMS and/or email, informing them of their auto-assessments.
If a refund is due to the taxpayer, it will be deposited directly into the taxpayer’s bank account within 72 business hours of notification. If money is owed to SARS, it must be paid by the due date to SARS’ Bank Account, eFiling, or the MobiApp.
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 do not need to do anything else, and the process ends here.
If the taxpayer discovers missing and/or inaccurate information pertaining to either income or expenses that 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.
Screening for danger
SARS has completed the necessary risk screening for all auto assessments issued, and unless a taxpayer submits a return, no verification, audit, or recall process will be initiated by SARS.
In exceptional circumstances, banks may report risks to SARS, which will be communicated to the taxpayer.
The normal SARS risk-screening process will be applied to all returns submitted by taxpayers.
This may trigger a verification, in which SARS will request taxpayers to submit supporting documents to substantiate the information declared on the tax return.
Assessments for submitted returns have been revised
If a taxpayer submits a return indicating that they disagree with SARS’s auto assessment, SARS will process the return and issue a revised assessment, which may result in a different financial obligation, such as a reduced refund, increased refund, or payment due to SARS.
Objections and appeals
If a taxpayer does not agree with the revised assessment, he or she may file an objection through the normal SARS objections process.
Non-provisional taxpayers who did not receive an auto-assessment and are required to file a return can do so from 1 July 2022 to 24 October 2022.
Provisional taxpayers and trust submissions can begin filing returns on July 1, 2022, and continue until January 23, 2023.
Innovation
“Auto-assessments are a critical innovation designed to improve SARS’s service offering to taxpayers.”
It adheres to the principle that the best service is no service and will allow SARS to investigate the possibility of eventually having no Filing Season, as we have come to know it,” said SARS Commissioner Edward Kieswetter.
He stated that the revenue service will make every effort to collect all revenue owed to the state while providing taxpayers with world-class service.
“This will enable the government to provide basic services to vulnerable individuals and households, such as the payment of old age grants and the provision of education and health care services,” he said.
Taxpayers are urged not to visit SARS offices.
Meanwhile, SARS advised taxpayers to wait for the email and SMS, and to avoid visiting SARS branches during the first week of July.
Those who still prefer to visit SARS branches are reminded to make an appointment through the appointment system to ensure an efficient service experience.
This can be done by sending an SMS to 47277 with the word “Booking” (Space) ID number/Passport number/Asylum Seeker number, or by going to the SARS website (www.sars.gov.za) and clicking on the “Book an Appointment” icon.
The revenue service has urged tax practitioners to book appointments through their channel only.
Taxpayers can also use the SMS number 47277 to obtain a tax reference number, determine whether a return is required, and obtain a statement of account.
Improving Taxpayer Services
SARS is working hard to improve its service to taxpayers by adding more digital offerings that will allow taxpayers to transact with SARS without visiting its branches.
This includes its online digital offerings such as eFiling, the SARS MobiApp, the aforementioned SMS service, the SARS website, and the SARS Contact Centre.
Furthermore, the IRS reminded taxpayers that failing to file a tax return or making an inaccurate or incomplete declaration is a criminal offense.
“We reiterate that SARS will levy penalties for both late and inaccurate/incomplete declarations.”
As part of our strategic goal of working with and through our stakeholders, SARS has had multiple engagements with various associations, including recognized controlling bodies, to ensure that tax practitioners understand the changes being implemented this year, including those related to auto-assessments.”
SARS also expressed gratitude to employers and third-party data providers who met the 31 May 2022 submission deadline.
SARS issued a stern warning to non-compliant employers and third parties, stating that the organization will pursue them as allowed by law.