July 15, 2022
South African Revenue Service implements new protocol for estimated assessments
The South African Revenue Service's (SARS) 2021/22 tax filing season started on 1 July 2022.
This year SARS is issuing estimated assessments (still being called auto assessments) if a taxpayer's tax return is mostly populated by third-party data. Should the taxpayer agree with the assessment, there is no action required from them, the return will be regarded as submitted and final by SARS. Any refund due will be released to the taxpayer and if a payment is due to SARS, this must be made by the deadline stipulated on the assessment.
The above is different from the 2020/21 tax year. If a taxpayer's 2020/21 tax return was mostly populated by third-party data, SARS raised an auto assessment which the taxpayer then had to either "accept" or "reject" on eFiling. An auto assessment was not final if the taxpayer did not actually accept the assessment.
The estimated assessments being issued this filing season are populated using information SARS has collected from employers, medical schemes, retirement annuity fund administrators, financial institutions, and any other applicable other third-party providers. Taxpayers can view the third-party data that was used to prepopulate the return and confirm it is correct by clicking on the "Third Party Data Certificate" search button on the menu bar.
A taxpayer should check the estimated assessment very carefully before allowing it to be regarded as final. The fact that an estimated assessment was issued will in no way mitigate penalties and interest if any data has been omitted. If any other income is earned which is unlikely to be obtained from third-party providers, the taxpayer must submit an amended return.
If the taxpayer is not in agreement with the estimated assessment and wishes to amend the return, they would need to access their tax return via eFiling, update the return with the additional information and resubmit to SARS. Should changes be required to the return, this must be done within 40 days of the estimated assessment issue date, otherwise it will be accepted by SARS as submitted and final.
If a taxpayer needs more than 40 days to submit the amended return, they can apply for an extension on eFiling. An extra 21 days will be granted to file this application.
A taxpayer should receive an SMS and, in some instances, also an email (depending on the contact information on the taxpayer's profile and RAV01 form) from SARS stating that an estimated assessment has been issued. This could be an issue for taxpayers who have not updated their personal details on their profiles. A taxpayer has 21 days to notify SARS of any change in their registered particulars and other material facts, failure to do so may result in penalties and interest. This may be of particular importance for taxpayers who are nonresident and have left South Africa without updating their tax profiles with their new information.
From December 2021, administrative penalties for the late filing of a single tax return will be levied. Previously, penalties were only levied when two or more tax returns were outstanding. These penalties are based on taxable income and range from R250 to R16,000 for each month the return is outstanding. These penalties are calculated from the first day the return is late.
SARS 2021/22 tax season closes on 24 October 2022. For provisional taxpayers and Trusts, the season closes on 23 January 2023.
A taxpayer can view their estimated assessment and decide to amend the return through:
For additional information with respect to this Alert, please contact the following:
Ernst & Young Advisory Services (Pty) Ltd., Johannesburg
Ernst & Young Société d'Avocats, Pan African Tax – Transfer Pricing Desk, Paris
Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London
Ernst & Young LLP (United States), Pan African Tax Desk, New York