SARS Auto-Assessments - Good or Bad?

Auto-Assessment - Efficiency vs Loosing what's owed to you

As the 2024 tax filing season is upon us, the South African Revenue Service (SARS) has started its auto-assessments of certain taxpayers to "streamline" the process for certain taxpayers. While these assessments may seem convenient, it’s essential to understand their implications fully. Let’s delve into the details:

What Are SARS Auto-Assessments?

An auto-assessment is an automatic assessment issued by SARS based on data collected from various sources, including employers, financial institutions, medical schemes, and retirement fund administrators. SARS uses this data to calculate your tax liability without requiring direct input from you.

The Pros and Cons of auto-assessment

Pros:

Efficiency: Auto-assessments save time by pre-populating your tax return with relevant information.

Refunds: If you agree with the assessment and are due a refund, you’ll receive it promptly (usually within approximately 72 hours).

Simplicity: For straightforward tax affairs, auto-assessments can be hassle-free.

Cons:

Limited Deductions: Auto-assessments do not consider additional tax deductions beyond what’s pre-populated. This omission could cost you money if you’re eligible for further deductions. For example, expenses related to medical costs, donations, home office deductions, or travel allowances may not be factored in.

Risk of Under-estimation: You might miss out on legitimate deductions, resulting in a smaller refund or even owing money to SARS.

No Customization: While they streamline the process, they may not account for unique circumstances or specific financial situations.

Incorrect auto-assessment: If you accept your auto-assessment and it turns out to be incorrect or you fail to declare additional income that SARS is unaware of, there are significant risks. SARS could impose a penalty of up to 200% of the tax payable (plus interest) if they later audit you and discover the unreported income. Beyond financial penalties, there may be criminal consequences for the taxpayer as well.

What Should You Do?

Review Your Auto-Assessment: When you receive an auto-assessment, log in to eFiling or the SARS Mobi App to view the details. Check if it accurately reflects your financial situation. If you need assistance, give us a shout!

Agree or Dispute: If you agree with the assessment, no further action is needed. If not, file your corrected tax return by the due date (21 October 2024 for non-provisional taxpayers) with any additional information or deductions.

Seek Professional Advice: Consider consulting tax professionals like BNT to ensure you maximize allowable deductions and avoid costly oversights.

Conclusion

While auto-assessments offer convenience, they come with limitations. Be vigilant, review your assessment carefully, and take advantage of professional assistance to optimize your tax position. Contact BNT now for accurate tax services that prioritize your financial well-being.

For more information, visit BNT’s Website, remember, informed decisions lead to better financial outcomes!