You, SARS and your duty to declare and pay tax

The 2024 tax season kicked off this month, with the South African Revenue Service (SARS) dedicating the first two weeks to sending auto-assessments to around 4.8 million taxpayers.

From July 15, taxpayers not selected for auto-assessments will be able to file their returns on the SARS eFiling system.

Auto-assessments are intended to make taxpayers’ live easier by assessing your income without your input. They make use of information about your income, deductions and tax that your employer, bank, financial institutions, medical schemes, retirement annuity fund administrators and other third-party data providers submit to SARS.

This data provided to SARS is also used to pre-populate and make it easier for you to complete your return if you are not auto-assessed or do not accept the auto-assessment.

Before you accept or reject an auto-assessment or file your return, here are few things you ought to know or check.

1.  You may need to declare additional income

An auto-assessment may be inaccurate or a pre-populated return incomplete if you earned income SARS does not know about. Correct your return if you earned income that includes:

• Income you earn from renting out a property;
• Income from running a business, including a side-hustle;
• Income from professional or other services contracts;
• Income from a foreign employer;
• Income from an employer that did not submit an IRP5 to SARS for you; and
• Investment or annuity income that was not reported to SARS.

2.  You may need to declare taxable gains

Financial institutions should report taxable capital gains you make in any tax year to SARS, but if the information is not submitted for any reason or you have made any of the following gains, you may need to add the relevant details:

• Capital gains on foreign investment;
• Capital gains on property you have sold;
• Gains from selling crypto assets.

3.  You need to check the info

If SARS issues you with an auto-assessment that underestimates your taxable income and/or the tax you owe, or fails to include your taxable income in your prepopulated return, it does not mean it is your lucky day and you don’t have to pay what you actually owe.

It is your responsibility to check this information is correct and to provide any missing information.

Remember SARS has access to your bank account and is increasingly using data analysis to determine whether taxpayers declare what they should.

If in a later tax year SARS finds out that you should have paid more in tax in a prior year, it can raise an additional assessment, penalise you up to 200% of the tax you owe and charge outstanding interest.

4.  You may need to tell SARS about your deductions

Your auto-assessment or prepopulated return may not contain all the information you need to provide in order to qualify for tax deductions and reduce the tax you will pay.

Sean van Zyl, a financial planner and a tax practitioner at SVZ & Associates, says you should provide details on your return if:

• You have medical expenses you did not recoup from your medical scheme. These expenses should be recorded on your medical scheme tax certificate that is supplied to SARS, but Van Zyl says these expenses do not always reflect on your return, so you should check this deduction.
  Yolisa Dyasi, tax technical specialist: operations and tax administration at the South African Institute of Taxation, says you may need to submit the actual receipts from, for example, a pharmacy and proof of the prescription.
• You are paying for medical scheme membership for someone who is not a dependant on your scheme, such as a parent. Van Zyl says you need a membership certificate and bank statements proving that you made the payments.
  Dyasi says you may also need to provide a detailed explanation on your relationship with the person whose membership you sponsor and why you are paying the medical scheme contributions on their behalf.
• You have expenses related to a disability – you can claim expenses related to a disability you or a family member have but you need confirmation of the disability from your doctor.
• You have business expenses you can claim from business income you declared.
• You work from home in a dedicated home office and have home office expenses you want to claim.
• You can claim wear and tear on equipment such as your laptop or tablet.
• You incurred travel expenses for work or in the production of your income. Van Zyl says taxpayers often do not realise they need to submit how many kilometres they travelled for work purposes and the related expenses to claim against any travel allowance received.
  Dyasi says you need to submit a detailed logbook recording where you travelled, for what reason, who you met and their contact details.
• You can claim expenses for the installation of solar panels during the tax year to February 2024.
• You have made tax deductible donations to a recognised public benefit organisation.
• Your retirement fund or retirement annuity fund contributions do not reflect on your auto-assessment or tax return.
  
  

5.  It is your responsibility to check if you were auto-assessed

If you didn’t get an auto-assessment and possibly should have, consider whether it could be because you have changed your email address or your cell phone number recently. Not receiving the assessment because your details changed does not mean you are off the tax hook.

It is your responsibility to ensure that SARS has the correct details for you.

You can check with SARS if it has selected you for auto-assessment here.

If you have not received the auto-assessment because your contact information is inaccurate, correct that on the SARS eFiling site in the SARS registered details section.

If you were auto-assessed previously but do not receive one this year, it is up to you to check if you need to file a return.

Van Zyl says even if you are not required to file a return, it may be in your interests to do so. He says you may qualify for a refund and your tax affairs will be up to date should the requirements on who needs to file change in future.

Should you die, the executor of your estate can file the estate return without delays resulting from outstanding returns from previous years, he says.

6.  Get incorrect data corrected

If the information included in an auto-assessment or pre-populated return is incorrect, you need to ask the data provider, such as your employer or financial institution, to correct it, Dyasi says.

You can check what information a third-party has provided to SARS on your eFiling profile, but you cannot amend prepopulated information – the provider must amend its data submission to SARS.

You can only add missing information, if, for example, information on a tax certificate has not been used to pre-populate your return. SARS will then ask you to provide the certificate.

If, for example, your employer did not submit your IRP5 certificate, you will need your payslips, bank statements and employment contract as supporting documents.

7.  Watch out for shared income with a spouse

Van Zyl says taxpayers who are married in community of property often do not realise that their returns will reflect 50 percent of any passive income, such as interest income or dividends on an investment, in the name of a spouse.

This can result in the taxpayer being in a higher tax bracket if the investment income exceeds the exempted amount of R23 800 for under 65s and R34 500 for over 65s.