Tax season has started, and while ordinary taxpayers have in theory until 24 October to file their returns, if you receive an auto-assessment, you only have 40 business days to verify and update the information.

An auto-assessment is a pre-populated tax return based on third-party data that SARS receives from employers, financial institutions, medical schemes, and retirement fund administrators. This usually applies to salaried employees who have relatively simple tax returns.

SARS has confirmed that it will be increasing the number of taxpayers who will receive an auto-assessment.

If you receive an auto-assessment and do not verify it within 40 business days of it being issued, SARS will automatically assume that you agree with the assessment. If there are items missing from the auto-assessment – for example, you received additional income not captured by SARS in your tax return – you could face penalties.

Rehnu Vallabh, Senior Tax Consultant at Tax Consulting SA, explains: “The burden of proof under section 102(1) of the Tax Administration Act, rests with a taxpayer since the assessment is essentially based on the facts as submitted by the taxpayer in the return.”

Failing to ensure the accurate and timeous filing of your tax return, or failing to settle any payments due, will lead to administrative penalties. The administrative non-compliance penalty for the failure to submit a return comprises fixed amount penalties based on a taxpayer’s taxable income and can range from R250 up to R16 000 a month for each month that the non-compliance continues.

How auto-assessment works

• You will receive a notification from SARS (via email or SMS) that states that you have a pre-populated income tax return.
• Before accepting the auto-assessment, review the preloaded information to confirm the accuracy of this data. If everything is correct, you don’t have to do anything further. If you owe money to SARS, you must make payment by the due date specified in your assessment. If SARS owes you money, your refund will be processed as normal.
• If any data does not correspond with you original tax certificate, or there is some missing information, immediately get in touch with the relevant entity (it could be your employer, your medical scheme, your retirement annuity fund, or some other third party) to make sure that they have complied with their submission requirements.
• If you choose to edit the preloaded tax return and SARS is not satisfied, your return will most likely be selected for review and verification.

You only have 40 business days to review your pre-populated return (on eFiling or the SARS MobiApp) to check that everything is correct.

According to Tax Consulting South Africa, this is the paperwork you need ahead of filing your return:

• Your employee’s tax certificate (your IRP5), or if not applicable, all your payslips for the year of assessment.
• All your third-party data – IT3(b), IT3(c), IT3(e), IT3(s) tax certificates.
• Your travel logbook, if applicable, complete up to 28 February 2022.
• Relevant passport pages if you rendered any services abroad, as requested by your employer.
• The tax certificate from your medical aid scheme (if you belong to a medical scheme).
• Proof of qualifying medical expenses paid by you and not recovered from your medical scheme.
• The tax certificates received from registered charities (S18A) for any donations made.
• All documents related to any other income received, such as invoices or statements with regards to business, rental, or other investment income or expenses.

If you have received a notification from SARS that you have been given an auto-assessment, do not ignore it!

This article first appeared in City Press.