What tax practitioners should be aware of this tax season

CIBA’s technical expert Barend van der Westhuizen shares areas to watch out for and advice as to how accountants. 

Auto assessments might be killing business, but don’t assume they’re always right.

“The main concern tax practitioners are facing at the moment is a loss of income because auto assessments from SARS result in practitioners losing revenue,” says CIBA technical team expert, Barend van der Westhuizen. 

Auto assessments is a SARS system that automatically prepopulates tax returns for certain taxpayers with third-party data such as their salaries, medical aid, and pension deductions, allowing taxpayers to submit returns easily. Previously, this work was done by a tax practitioner. 

However, Van der Westhuizen explains that although rare, sometimes these assessments are wrong, and the taxpayer doesn’t notice this. 

“In these economic times, taxpayers are just happy to get a refund. They aren’t necessarily double checking if the refunded amount is correct.”

“In the past, tax practitioners would have reviewed all the auto assessments, but I don’t think they will do it this year. They may only look at those auto assessments if the client thinks their return is too small.”  

With so many deadlines: remember failing to plan is planning to fail 

Another concern for tax practitioners is the myriad of deadlines they face. Besides auto assessments, practitioners face provisional tax deadlines at the end of August. They must also help clients comply with the new beneficial ownership requirements with the CIPC before the October deadline. 

Starting early and making sure that you plan accordingly is essential. “The tricky part for tax practitioners is planning because if you don’t plan it right, you will fall short,” says Van der Westhuizen.

Make sure you have supporting documents 

“I know it’s difficult because sometimes clients don’t give all the information, but tax practitioners need to file tax returns with a hundred percent accuracy, so they need to have supporting documents. Don’t just take your client’s word,” says Van der Westhuizen.

“For example, last year, we had an issue where taxpayers would get lump sum payments where the retirement annuity firm issued two IRP5s. One reflected on SARS platforms, but for some reason, the other did not. Practitioners had to manually punch in that information before submitting.” 

Hopefully, this issue is fixed, but this is why it’s essential to ask for documents and double-check the information.”

Van der Westhuizen notes that IRP5s sometimes do not reflect accurately on the eFiling system. Reasons include clients having two IRP5s and one not reflecting or an employer being late in submitting an IRP5. 

It’s always wise to ask clients for documentation, especially in the case of an audit or an objection. 

“You can’t argue with SARS or log an objection if you don’t have proof.”

Don’t only rely on logbooks alone 

Clients who are consultants require particular diligence when filing returns and ensuring they have sufficient supporting documentation. 

Van der Westhuizen notes that during audits, SARS increasingly asks for service books and contracts for the vehicle claimed as part of the travel allowance. 

“I’ve seen cases where people claim to be using a log book. But if you take the service book and match it up with the log book, the kilometers are different because the people are in a rush.”

Van der Westhuizen always asks his clients for a service record and a purchase agreement to verify the cost of the vehicle. When the taxpayer uses a spouse's vehicle, he ensures an affidavit exists explaining the situation. 

Get your clients paper-compliant, even if they can’t pay all their taxes

“SARS  knows that some clients don’t have funds to pay their outstanding taxes. They've said that, at the end of the day, if a VAT or PAYE return is outstanding, even if the taxpayer doesn’t have the money, they need to comply with the law,” says Van der Westhuizen.

“SARS has indicated to us that the taxpayer still needs to submit returns. If the outstanding debt is very high, the taxpayer or practitioner must contact SARS to make arrangements. Don’t hide because SARS will phone you and take legal action.”

Van der Westhuizen notes a recent incident where SARS came to a practitioner’s office and enquired about a client listed on the practitioner’s profile who hadn’t submitted returns. 

“You don’t want SARS to come knocking on your door. So it's best to file the return and get your client’s paperwork compliant."