Last week SA Revenue Services (Sars) announced the mass roll-out of its auto-assessment of taxpayers earning salaries, but as many tax and accounting practitioners have already discovered, this may deny clients lawful and valid claims.
Sars Commissioner Edward Kieswetter last week announced the mass roll-out of auto-assessment, which he said would alleviate the administrative burden on his staff. But comments from several tax practitioners cast doubt on the advisability of accepting auto-assessments from Sars.
Many tax practitioners are advising their clients not to blindly accept the auto-assessment from SARS as they may lose out claiming valid additional deductions or worse, not declare all their income, which is an offence and may land them in hot water.
The SA Institute of Business Accountants (SAIBA) CEO, Nicolaas van Wyk, stated that, “practitioners have an ethical responsibility to inform their clients of their taxpayer rights and responsibilities. All income must be declared and all valid deductions such as travel, medical, office expenses must be claimed. Tax practitioners must ensure that taxpayers receive the best advice and guidance so that they only pay the correct amount of tax and claim all the deductions they are allowed. The auto-assessment does not necessarily capture all this data correctly”.
In August 2020, Sars will be implementing an auto-assessment to some individual taxpayers. Taxpayers may receive an SMS if they are selected to be auto-assessed. Essentially this means that Sars attempted to complete your tax return based on third party data alone (such as IRP5, medical, investments). The intention is to save costs of filing and streamline the process. However taxpayers must still ensure they agree or declare all income and expenses. They need a tax practitioner for this.
“Saiba urges taxpayers to contact their tax practitioner first before accepting the auto-assessment”, says van Wyk.
Tax practitioners are duty bound to act in the best interest of their clients. This means carefully reviewing their tax affairs to ensure they can claim all allowable deductions and disclose all relevant income. In this way they make sure their clients claim or are refunded the legally appropriate amount, and not what SARS says you must pay.
It may be safer for some taxpayers not to accept the auto-assessment but rather file tax returns (as before) from the 1 September. Doing so will prevent the following scenarios from happening:
- Potentially no/or a reduced tax refund because Sars doesn’t have all the client data
- Potential errors as Sars may not have the latest tax certificates from the employer
- No ability to claim tax deductions which will not appear on your auto-assessment e.g. medical expenses, donations, home office, wear and tear, etc.
Saiba’s regional head for the West Rand, Grant Richardson, says the auto-assessment could infringe on taxpayer rights. “There are several problems we have encountered with the auto-assessment. For example, travel allowances do not distinguish between business and private travel. That information must be input manually into the system, otherwise you will get an incorrect allowance and therefore pay too much tax. There are other areas that will also result in the auto-assessment throwing out a figure which is to the benefit of Sars, but not to the client.”
Saiba members and practitioners point to several areas where the auto-assessment is throwing out incorrect assessments based on wrong data. These include allowable deductions for Retirement Annuity contributions, interest income and medical expenditure which may not be detailed on IRP5 forms. These must be manually entered in order to avoid a tax overcharge by Sars.
Tax filing dates
The new filing dates for the 2020 tax filing season, which cover income/expenses from 1 March 2019 to 28 February 2020, will be as follows:
- Salary earning (non-provisional) taxpayers who file online: 1 September 2020 to 16 November 2020
- Provisional taxpayers who file online: 1 September 2020 to 31 January 2021
- Branch filers (By Appointment): 1 September 2020 to 22 October 2020.