Sars introduced the auto assessment during the Covid lockdown to speed up electronic tax filing and make it easier for taxpayers to complete their tax filings. Up to three million taxpayers received an auto assessment, but tax practitioners warn that the assessment should be carefully checked before accepting.
I don’t automatically accept any auto assessment,” says Grant Richardson, Saiba’s East Rand regional head. “Some of the information pre-populated on the assessment is wrong and other parts are not always filled in at all.”
As Accounting Weekly reported in August, tax practitioners are advised toe exercise caution with the new auto assessment from Sars.
Sars is now able to pre-populate individual taxpayers’ information using third party sources such as medical scheme tax certifi8cates from medical aids, IRP5 forms from employers, retirement annuity certificates and interest certificates.
Saiba member Tamsin Laight of Scottburgh in Kwazulu-Natal points to some of the problems with the Sars auto assessment. “In some of the cases I have seen, IRP5 and investment information that is pre-populated on the auto assessment is incorrect, and third party information providers have not done reconciliations. At the end of the day, the onus is on the taxpayer to make sure the right information is uploaded to Sars.
Apart from incorrect information supplied by third party providers, other problems identified on the auto assessment include:
According to Richardson, travel allowances may 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,” he says.
No capital gains certificates, which often go hand in hand with interest certificates on the same portfolios are populated
Inability to change pre-populatged data such as interest earned on savings and investments. This can be a problem for non-residents earning offshore interest yet Sars will assume SA resident interest ratres
When to reject an auto assessment
The Sowetan reports Joon Chong, partner at Webber Wentzel, advising taxpayers to reject the auto assessment if they:
- Have qualifying medical expenses not recorded on the medical scheme certificates where you can claim the additional medical expenses tax credit;
- 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 you to claim tax deductions; and
- Have capital gains or losses from disposals of assets in the year which are not recorded in your IT3c certificates.