Over the last couple of years, SARS has rolled out auto-assessments to reduce late submissions of tax returns and to make the tax return submission process easier for individual taxpayers in South Africa. This has largely been made possible by the requirement for employers to register all employees — whether casual or permanent, and whether earning above or below the tax threshold.
As a result, SARS is able to source relevant information under an individual’s tax number and prepopulate the tax return on eFiling.
Auto-assessments are not issued to all taxpayers. They are mainly aimed at individuals with relatively simple tax affairs — typically those who only receive an IRP5 or IT3(a) certificate (submitted by their employer or financial institution), earn interest, contribute to retirement annuities, and possibly belong to a medical aid.
The idea behind a SARS auto-assessment is that these types of tax returns require little to no additional input from the taxpayer, other than a careful review for accuracy.
Taxpayers who earn income that requires calculations or manual input — such as a travel allowance, home office expenses, rental income, or other additional deductions — generally do not qualify for auto-assessment.
SARS determines whether you qualify for an auto-assessment based on your prior-year tax information, as well as the latest data they have available. For example, if you received a severance package and a tax directive was issued, SARS may choose not to auto-assess you and instead require you to submit your own tax return.
In these cases, you may also be selected for verification, where SARS will request supporting documents — such as the tax directive — for review.
A very important point to understand is that an auto-assessment is not guaranteed to be correct. The responsibility, or onus, always remains with the taxpayer. You are legally responsible for declaring all taxable income and ensuring that your tax return is complete and accurate.
SARS can only assess you based on the information they have available. If certain income or deductions are missing, the assessment may be incorrect.
If you have been wrongly auto-assessed, SARS allows you to submit a Request for Correction to amend the tax return. In recent years, these corrections have been allowed up until around October.
However, if a refund was paid out incorrectly and you were in fact liable for tax, interest will accrue on the outstanding amount until the correction is finalised. This is why it’s crucial not to ignore an auto-assessment or assume it is correct.
My advice to all taxpayers is to check their SARS eFiling profile as soon as tax season opens. If you notice that you have been auto-assessed and something doesn’t look right, rather amend it sooner than later.
Auto-assessments are meant to reduce the administrative burden on taxpayers, but they can quickly become problematic if an incorrect return is accepted as final.
This is where working with a tax practitioner can make a real difference. A proper review ensures that SARS has taken everything into account. For example, while medical aid information is prepopulated, out-of-pocket medical expensesare often not. If these expenses exceed 7.5% of your taxable income, you may be entitled to an additional refund.
The same applies to donations. Many taxpayers don’t realise that donations made during the year can be deducted from taxable income if a valid Section 18A certificate was issued.
Auto-assessments have also revealed an unintended consequence. Many individuals who have never submitted a tax return are now receiving notifications from SARS that they have been auto-assessed. Some of these individuals don’t even have an eFiling profile and, according to SARS’ own criteria, may not technically be required to submit a return — for example, where they worked for only one employer and earned below the submission threshold.
Despite this, SARS records now reflect outstanding returns for some of these taxpayers, and in certain cases, administrative penalties have already been imposed.
While the technology behind auto-assessments is genuinely impressive and world-class, it operates on automated rules and flags. Unfortunately, the system cannot always differentiate perfectly between taxpayers who are required to submit returns and those who are not.
This has led to increased queues at SARS branches and higher volumes of calls to SARS support lines, as more people discover assessments or amounts due on their profiles that were not fully or correctly prepopulated.
At this stage, I generally advise my clients to submit a tax return every year, even if they are technically not required to do so. It is far better to check annually and know that you are fully tax compliant than to be surprised years later with penalties or outstanding returns.
Tax compliance can feel daunting, but with the right support, it doesn’t have to be.
At Olora Accounting, we love to serve and have a heart for helping people. If you need help reviewing a SARS auto-assessment or submitting your tax return, feel free to reach out — we’ll get it done.
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