With the South African Revenue Service (SARS) auto-assessment period coming to an end, taxpayers are being urged not to rush their tax returns or assume that the information pre-filled by the tax authority is always complete.
Auto-assessment has expedited filing for millions of South Africans, but failing to review the information carefully can result in delayed refunds, penalties, additional tax liabilities or SARS verification.
For taxpayers who receive auto-assessment, the first and arguably the biggest mistake is accepting it without checking that all the information is correct.
Although SARS receives data directly from employers, banks, medical schemes and other third parties, information may still be missing or inaccurate.
Taxpayers should compare the valuation with documents such as their IRP5, Medical Aid Tax Certificate, Retirement Annuity Certificate and investment statement before accepting it.
Another common error is failing to declare all sources of income.
While SARS assessments are great, many taxpayers believe that SARS already has a complete picture of their finances. However, additional earnings from freelance work, rental properties, consulting, side businesses or certain foreign income may still need to be declared.
Similarly, taxpayers who sold property, shares, unit trusts or cryptocurrencies during the tax year should ensure that any applicable capital gains or taxable crypto income is reflected correctly on their returns.
Taxpayers are also cautioned against claiming deductions for which they are not eligible.
Home office expenses are one of the most misunderstood tax deductions, requiring a dedicated workspace used exclusively and regularly for work under strict SARS rules. Similarly, travel deductions require an accurate and up-to-date logbook, while personal expenses cannot be claimed as business costs.
On the other hand, some taxpayers miss out on legitimate tax benefits by failing to claim allowable deductions or credits, including retirement annuity contributions, qualified medical expenses not covered by medical plans, and donations made to approved public benefit organizations.
There are delays in processing returns due to administrative mistakes. These include entering incorrect banking details, failing to update contact information such as cellphone number or email address, uploading incomplete or unclear supporting documents, or accidentally submitting a certificate from the wrong tax year.
Taxpayers are also encouraged to pay close attention to correspondence from SARS after submitting their returns. Ignoring requests for verification or supporting documentation may delay refunds and, in some cases, result in presumptive assessments or administrative penalties if the deadline is missed.
Waiting until the final days before the filing deadline is another common mistake. Last-minute submissions leave little time for correcting errors, answering SARS questions or obtaining missing documents when verification is required.
To avoid unnecessary complications, taxpayers should review each auto-assessment before accepting it, ensure all sources of income are declared, verify that claimed deductions are supported by the required documentation, check that banking and personal details are up to date, respond promptly to any SARS requests for additional information and keep all supporting tax records for at least five years if requested by SARS.
With filing season now underway for taxpayers who need to submit or amend their returns, taking a few extra minutes to review information before clicking “Submit” can help avoid costly mistakes and delays later.
IOL