The South African Revenue Service (SARS) has introduced a number of changes to this year's filing season to make the process easier and smoother. The aim is to get it right the first time.
One of the changes is a new declaration alert questionnaire that helps identify and resolve issues earlier, reducing the chances of a taxpayer's return being selected for verification or audit.
According to Nico Theron, founder of Unicus Tax Specialist SA, taxpayers are likely to receive alerts before submitting their returns. It appears that the alert would indicate to the taxpayer that something may be wrong or missing from the return.
“Remember, SARS knows almost everything about you,” he adds. This will serve as a “caution” about the abundance of third party data available to SARS and what needs to be declared and how to declare it correctly.
How does the new announcement alert work?
Theron explains that in the past a taxpayer would receive a verification notice as soon as they submitted their return and SARS found discrepancies between their third party data and the information declared by the taxpayer.
With the change it appears that the taxpayer gets a pre-assessment verification alert. If so, SARS is warning taxpayers in advance that they will likely be selected for verification if they do not heed the alerts.
“It is a good idea, and we will have to wait and see whether it will contribute constructively to the e-filing process, or whether it will create unnecessary delays or lead to inaccurate assessments.”
Why can ignoring alerts cause problems?
Theron believes there will be taxpayers who will ignore the alerts.
“This is not fair. If you choose to ignore this and there are errors in the return it is highly likely that you will receive an assessment that you disagree with.”
He suspects that SARS will not be too forgiving of taxpayers who ignored alerts and submitted incorrect or incomplete returns. Once the taxpayer receives the alert he is advised to seek help in understanding what needs to be done to get it right the first time.
“Ignoring or misunderstanding the questionnaire may lead to unnecessary complications, including lengthy disputes with SARS.”
Double check third party information
Theron explains that some of the information submitted to SARS by third-party data providers such as your medical aid fund or superannuation fund may contain errors.
“It's important to pay careful attention to the questionnaire and make sure your returns are accurate,” says Theron.
Important filing season dates
Filing season has started
- July 1 to 12 for taxpayers who are being self-assessed.
- Non-provisional taxpayers must submit their returns between July 13 and October 23.
- And provisional taxpayers and trusts will have from July 13 to January 22 next year.
SARS advises provisional taxpayers to start preparing their tax returns in advance to avoid hasty and incomplete submissions.
Who is most likely to receive an announcement alert?
Theron says the people most likely to receive a declaration warning questionnaire are high net worth individuals and taxpayers with multiple income streams such as rentals, interest and dividends.
Their tax returns are generally more complex, and are likely to receive closer scrutiny than SARS.
Theron urges, “Receiving a declaration alert does not automatically mean that something is wrong. However, taxpayers should take the alert seriously, review the information carefully and seek professional guidance if they are unsure how to respond. Addressing potential issues before submission is generally much easier than resolving a dispute after the assessment has been issued.”
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