This year, taxpayers should be aware that SARS will be assessing a number of non-provisional taxpayers automatically and has also shortened the 2020 tax filing season
Taxpayers selected for auto-assessments
The South African Revenue Service (SARS) will be assessing a significant number of non-provisional taxpayers automatically in August 2020, using third party data. These taxpayers will receive an outcome via an sms which will direct them to eFiling or the SARS MobiApp to "Accept" or "Edit" the outcome.
An auto-assessment which is not specifically accepted, edited or rejected by the taxpayer will automatically be filed on 29 January 2021 if the third party data used to generate the assessment is correct and complete.
When should you file returns, even if you are auto-assessed?
The auto-assessments issued to taxpayers are based on third party returns provided to SARS such as those provided by employers, retirement funds, medical aid and insurance schemes, and financial institutions. The auto-assessments will be completed with information on the retirement funds and medical aid certificates, IRP 5 employee certificates, and IT3b and IT3c certificates for interest and dividends received, and capital gains or losses from investments.
Taxpayers should note the following on their auto-assessments.
If any amounts on their third party returns are not correct, and the auto-assessment reflects the same incorrect information, the third party return will have to be amended first and resubmitted to SARS before SARS will update the auto-assessment. Taxpayers should contact the relevant third party to amend these returns and resubmit to SARS.
If the auto-assessments do not reflect the same information on the third party returns, then the relevant third party should also be contacted. From what we understand of the auto-assessment process, this scenario is unlikely to happen as the same information on the third party returns should pull through to the auto-assessments.
Taxpayers should reject the auto-assessments and should rather file the normal ITR12 returns if they are selected for auto-assessments and they:
- have qualifying medical expenses not recorded on the medical aid certificates where they can claim the section 6B additional medical expenses tax credit. These would be, for example, qualifying medical expenses incurred by the taxpayer for themselves and dependants in the 2020 year of assessment. Taxpayers should prepare schedules of the amounts incurred and be ready to upload these schedules, together with documents showing proof of the expenses, such as invoices, if their ITR12 returns are selected for verification;
- have other revenue streams in the year which need to be declared such as net rental income or losses;
- need to submit logbook claims for business kilometres against travel allowances;
- have made donations to public benefit organisations which allow them to claim section 18A deductions;
- have capital gains or losses from disposals of assets in the year which are not recorded in the IT3c certificates.
The above declarations, income, exemptions or deductions are not reflected on third party returns. These taxpayers will probably not be selected for auto-assessments by SARS, based on their historic returns submitted.
Shorter tax filing season
The 2020 tax season is considerably shorter this year relate to 2019. The season starts later and also ends earlier:
- taxpayers who submit their ITR 12 returns electronically at a branch or manually can do so by appointment between 1 September 2020 and 22 October 2020 (2019: one month earlier from 1 August 2019 to 31 October 2019);
- non-provisional taxpayers who submit the ITR12 returns on eFiling can do so between 1 September 2020 and 16 November 2020 (2019 : 1 July 2019 to 30 November 2019);
- provisional taxpayers who submit their ITR12 returns on eFiling can do so between 1 September 2020 and 29 January 2021 (2019: 1 July 2019 to 31 January 2019).
Given the significantly shortened tax filing season for 2020, taxpayers and their tax practitioners should prepare for submission as early as possible and not wait until the last day to prepare supporting documents, check and submit their ITR12 returns.
Taxpayers who file by eFiling will be the most affected, as the 2020 year of assessment ITR 12 returns will only be available two months later from 1 September 2020, instead of 1 July in previous years. Taxpayers should work closely with their tax practitioners now to start the process of compiling relevant information and documents in anticipation of 1 September 2020 when their 2020 tax returns will be available on eFiling.