Each year, the South African Revenue Service (SARS) issues auto-assessments to selected taxpayers as part of its effort to streamline the annual income tax filing process. Using information submitted by third-party providers such as employers, banks, and medical schemes, SARS generates a pre-filled tax assessment without requiring the taxpayer to submit a return manually. While this system offers a faster and more efficient approach to filing, it remains the taxpayer’s responsibility to ensure that all the details are accurate and complete.
Key Takeaways
- Auto-Assessment Is System-Generated: SARS creates auto-assessments using data from third parties like employers, banks, and medical schemes—no initial input from the taxpayer is required.
- Accuracy Must Be Verified By The Taxpayer: Taxpayers are responsible for checking the assessment, comparing it to their own records, and submitting corrections or amendments if errors are found.
- Errors Can Lead To Penalties Or Repayments: Inaccurate data may result in over- or underpayments. If SARS issues a refund based on incorrect data, any overpaid amount must be returned.
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What Is An Auto-Assessment?
An auto-assessment is a tax calculation automatically generated by SARS for selected individuals. Using information submitted by employers, banks, medical aid providers, retirement fund administrators, and other third-party sources, SARS compiles the taxpayer’s return on their behalf. This process does not require any prior action or submission from the taxpayer themselves.
Who Qualifies For A SARS Auto-Assessment?
SARS issues auto-assessments to individual taxpayers whose tax affairs are relatively straightforward and for whom sufficient third-party data has been received. This data typically includes information from employers, financial institutions, medical schemes, and retirement annuity fund administrators.
Criteria for Auto-Assessment Eligibility
- Single Source of Income: Taxpayers who earn income from a single employer and have no additional income streams, such as rental income or freelance earnings, are more likely to be auto-assessed.
- Third-Party Data Availability: Individuals for whom SARS has received comprehensive third-party data, including IRP5/IT3(a) certificates, medical aid contributions, and retirement annuity fund contributions, are candidates for auto-assessment.
- No Additional Deductions or Claims: Taxpayers who do not intend to claim additional deductions, such as travel expenses or home office costs, beyond what is reflected in the third-party data, are suitable for auto-assessment.
Exclusions from Auto-Assessment
Taxpayers with more complex financial situations may not qualify for auto-assessment. This includes individuals with multiple income sources, significant capital gains, or those who wish to claim additional deductions not captured in third-party data. Such taxpayers are required to submit their tax returns manually to ensure accurate assessment.
SARS notifies eligible taxpayers of their auto-assessment status via SMS or email. Upon receiving this notification, taxpayers should log into eFiling or the SARS MobiApp to review their assessment. If the information is accurate and complete, no further action is required. However, if discrepancies are found, taxpayers should submit a corrected tax return before the specified deadline.
The Process Of Accepting Or Disputing The SARS Auto-Assessment
Even though the auto-assessment is compiled using information submitted by third parties, accuracy is not guaranteed. Taxpayers are still responsible for ensuring the information is complete and correct. The steps below outline how to properly manage this process and remain compliant with SARS requirements.
SARS Notification And Tax Practitioner Alert
Once SARS issues an auto-assessment, a notification will be sent via eFiling or the SARS MobiApp. Taxpayers should promptly inform their registered tax practitioners or advisers upon receiving this notice to ensure the matter is handled timeously.
Submit Supporting Documents And Information
Taxpayers must gather and submit all necessary supporting documents, such as IRP5 and IT3 certificates, as well as any other income or deduction-related records not reflected in the initial assessment. This ensures that the review process is based on a full and accurate set of information.
Confirm Assessment Details
The appointed tax practitioner should cross-check the data used in the auto-assessment against the documents provided by the taxpayer. This comparison can be done by logging into SARS eFiling or using the MobiApp, where the assessment breakdown can be viewed in detail.
Accept Or Amend The Assessment
After reviewing the contents of the assessment, a decision must be made: if the details are correct, no further action is needed. However, if any part of the assessment is incorrect or incomplete, a revised tax return must be completed and submitted before the applicable deadline. This can be done through the eFiling platform or the SARS MobiApp.
What Data Does SARS Use?
SARS compiles auto-assessments using information provided by various third-party entities. This data is submitted by employers, financial institutions, medical schemes, retirement fund administrators, and other relevant bodies. The information is used to pre-populate tax returns and calculate tax liabilities.
Key data sources include:
- IRP5/IT3(a) Certificates: These documents detail income earned from employment, including salaries, wages, bonuses, and allowances. Employers are required to submit this information to SARS, which is then used to determine taxable income.
- Medical Aid Tax Certificates: Medical schemes provide SARS with data on contributions made by members. This information assists in calculating medical tax credits and allowable deductions.
- Retirement Annuity Fund Contributions: Retirement fund administrators report contributions made by individuals towards retirement annuities. These contributions may qualify for tax deductions, reducing taxable income.
- Bank Interest: Financial institutions report interest earned on savings and investment accounts. This income is considered taxable and is included in the assessment.
- Investment Income and Capital Gains: Information on dividends received, capital gains from the sale of assets, and other investment income is provided by financial institutions. This data is essential for accurately assessing tax liabilities related to investments.
Impact of Omissions or Errors
If any of the third-party data submitted to SARS is incomplete or incorrect, it can lead to inaccuracies in the auto-assessment. For instance, unreported income or incorrect deductions can result in either an overpayment or underpayment of taxes. Taxpayers are advised to review their assessments carefully and ensure all information is accurate. Discrepancies should be addressed promptly by contacting the relevant third-party provider to correct the data submitted to SARS.
How Auto-Assessment Can Assist You
After SARS has completed processing your auto-assessment, they will send you a notification via eFiling or the SARS MobiApp. At that point, you’ll have the opportunity to examine the information SARS used in calculating the outcome. If you prefer not to go through the figures yourself, you can ask your Independent Tax Practitioner (ITP) to handle the review on your behalf. If you are satisfied with the results and have no objections, there is no need to take any action. In cases where a refund is due, it will typically reflect in your bank account within approximately 72 hours, assuming your banking details are accurate and up to date.
Before SARS issues any refund, ensure that the banking information they have on file is correct, as all payments will be transferred to that account. If you’re unsure about the next steps, your ITP can offer guidance. Take note that if SARS originally miscalculates your tax liability during the auto-assessment and later corrects the amount—after already issuing a refund—you will be required to repay the difference. For this reason, it is strongly advised not to spend the refund until your ITP confirms that SARS’s revised assessment has been finalised.
What if You Disagree With the Assessment?
If you, or a registered tax practitioner acting on your behalf, believe that the assessment issued by SARS is incorrect, you have the right to review it and make any necessary changes. This involves opening your tax return on the SARS platform, updating the relevant figures or declarations, and submitting the revised version before the deadline specified by SARS.
Ensuring your tax return reflects accurate information is vital, not only to maintain compliance but also to avoid legal consequences. South African law treats the submission of inaccurate tax information as a criminal offence—this includes failing to correct an auto-assessment when errors exist that could result in either a refund owed to you or a lower tax liability than initially calculated.
Pros and Cons of SARS Auto Assessments
Pros of SARS Auto Assessments
- Ease Of Use: Auto assessments simplify the tax process significantly. Taxpayers are not required to complete their tax returns manually, as SARS compiles assessments using information received from third-party sources. This saves time and minimises the administrative burden on individuals.
- Quicker Processing Of Refunds: Because SARS already holds the necessary details on income, deductions, and any applicable tax credits, it can process refunds more quickly. This means qualifying taxpayers are likely to receive their refunds sooner than if they submitted a manual tax return.
- Reduced Risk Of Mistakes: Auto assessments rely on pre-verified third-party data, which reduces the likelihood of mistakes. The system limits human error by using information that has already been confirmed and entered into the SARS system, rather than relying on individual data entry.
Cons of SARS Auto Assessments
- Limited Control Over The Filing Process: One of the main disadvantages is that taxpayers have less control over the accuracy and content of their tax submission. If SARS does not receive all relevant information—such as income from secondary employment or certain deductions—these omissions can result in an incorrect assessment.
- Potential For Incorrect Information: Although SARS accesses multiple data sources, mistakes can still happen. If, for example, an employer submits incorrect salary figures or if certain deductions are not captured, the final assessment could misrepresent the taxpayer’s actual position.
- Time-Consuming Disputes: Taxpayers can contest an incorrect auto assessment, but doing so may require gathering documents and engaging in a formal objection process. This can be both time-consuming and stressful, especially if the matter is complex or if communication delays occur.
Checking Data Accuracy
Access Your SARS Profile
Begin by logging into your SARS eFiling account. Once signed in, navigate to the “Third Party Data Certificate” section, where you will find the information submitted to SARS by employers, banks, and other institutions. Review these records carefully to ensure they reflect your financial position accurately.
Cross-Check With Your Own Documents
Compare the figures shown in the auto-assessment with the supporting documentation you have on file—such as IRP5s, medical aid tax certificates, and bank statements. Make sure all relevant income, deductions, and credits have been included correctly, and that the tax calculation aligns with your expectations.
Make Corrections Where Needed
If you identify discrepancies or missing information, you may correct the return by logging into SARS eFiling or using the MobiApp. Submit an amended return with the correct figures to ensure your tax liability is properly assessed.
Conclusion
SARS auto-assessments offer a streamlined way for many South African taxpayers to manage their annual tax responsibilities. However, while the process is automated, the responsibility still lies with the taxpayer to confirm that the assessment reflects all relevant income and deductions. Inaccuracies from third-party data or missing information can lead to incorrect tax outcomes, which may result in penalties or refund repayments. Taxpayers should take the time to carefully review their assessments, correct any discrepancies, and seek assistance from a registered tax practitioner if needed to avoid compliance issues.
Frequently Asked Questions
What is a SARS auto-assessment?
A SARS auto-assessment is a tax calculation that is automatically generated for selected individuals based on data submitted by third parties, such as employers, medical aid schemes, and banks. It is issued through the SARS eFiling platform or the SARS MobiApp, and does not require the taxpayer to submit a return initially.
Do I need to do anything if I agree with my auto-assessment?
If you have reviewed the information and are confident that it is accurate and complete, then no further action is needed. The assessment will be finalised by SARS, and if you are due a refund, it will usually be paid into your registered bank account within a few working days.
What should I do if I spot an error in my auto-assessment?
If any details in the auto-assessment are incorrect or incomplete, you should access your SARS profile through eFiling or the MobiApp and submit an amended tax return. This correction should be made before the stated deadline to avoid issues with penalties or miscalculated tax liability.
Can I dispute my auto-assessment?
Yes, if you believe that the assessment is incorrect even after submitting a revised return, you have the right to lodge a formal objection. This must be done within 80 business days of the original assessment date, and you will need to provide relevant supporting documentation for SARS to review your case.
What happens if I ignore an incorrect auto-assessment?
If you take no action and the assessment contains errors, it will be considered final after the deadline passes. This could result in either paying more tax than necessary or owing SARS money later, especially if a refund was incorrectly issued and subsequently reversed.
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