Filing season for individual taxpayers started on 1 July 2022. SARS has implemented auto-assessments and a significant number of individual taxpayers will be auto-assessed again this year. This process started on the 1st of July 2022. Individuals will receive an email or SMS if they are selected to be auto-assessed.
Important changes this year regarding auto-assessment
In the past, taxpayers had until the submission deadline to decide whether they accept or reject the automated tax return. This year, individual taxpayers will receive an estimated assessment instead of a populated return.
Data received from employers, medical aids, banks, retirement annuity funds, etc. will reflect on an individual’s assessment. Taxpayers who have been selected for auto-assessments will have 40 days after receiving the notification to respond.
How to respond to auto-assessments?
The deadline for submission for non-provisional is 24 October 2022 and for provisional taxpayers 23 January 2023. The deadline doesn’t apply for taxpayers who are part of the auto-assessment process and agrees with the assessment.
If the taxpayer is satisfied that the information submitted to SARS is correct and a refund is due, they need not take any action to “submit” the assessment. If they are satisfied it is correct, and they are due to make a payment to SARS, they must do so by the payment due date specified on the Notice of Assessment (ITA34). If a refund is due to you, the SARS website states that the refund process takes about 72 hours from the date the assessment was issued to you. If you owe SARS tax, you will need to pay by the due date on the assessment otherwise, there will be interest.
However, if a taxpayer believes the auto assessment is incorrect or does not contain information on all sources of income (e.g., rental) or allowable deductions, they must access and complete their tax return and file it within 40 business days. If it is not possible for a taxpayer to make the necessary changes during this timeframe, they can apply for an extension via eFiling before the 40 days is up or within 21 business days of the 40 days based on reasonable grounds. Extensions beyond 21 business days will only be granted on exceptional grounds, which may be difficult to justify. It is crucial to ensure that a taxpayer responds to the auto-assessment within the 40 days to avoid unnecessary disputes on incorrect information submitted to SARS.
Practical example:
If your auto-assessment is issued on 1 August 2022, request an extension preferably within 40 business days of 1 August 2022, which is by 23 September 2022.
If you are late, request an extension within 21 business days after 23 September 2022 i.e., by 24 October 2022.
Extensions further than 23 September 2022 until 31 July 2025 (i.e., up to 3 years from issue date of assessment) require exceptional circumstances and may be difficult to justify.
SARS will implement administrative penalties for the late filing of a tax return. These penalties start to mount from the first day that the return is late.
Taxpayers can thus expect an SMS or email from SARS to ensure they comply with SARS’s requirements and to accept their return on time.
If you are not sure how to deal with your auto-assessment or correcting your return, TAC Accounting (Pty) Ltd is just a phone call away.