The South African Revenue Service (SARS) has introduced several changes to this year’s Filing Season to make the process easier and smoother. The aim is to get it right the first time.
One of the changes is a new declaration alert questionnaire to assist with identifying and resolving issues earlier, reducing the chances of a taxpayer’s return being selected for verification or audit.
Nico Theron, founder of Unicus Tax Specialists SA, welcomes the change. He explains that taxpayers will likely receive the alert before they submit their returns. The alert , it seems, will prompt the taxpayer that something may be wrong or missing from the return.
“Remember, SARS knows almost everything about you,” he adds. It will serve as a “warning” about the wealth of third-party data available to SARS and what needs to be declared and how to declare it correctly.
How the declaration alert works
Theron explains that in the past a taxpayer would receive a verification notice as soon as they submitted their return and SARS picked up discrepancies in their third-party data and the information declared by the taxpayer.
With the change it appears the taxpayer gets a pre-assessment verification alert. If so, SARS is warning taxpayers in advance that they will probably be picked for verification if they do not attend to the alert.
“This is a great idea, and we will have to wait and see if it is going to contribute constructively to the eFiling process, or whether it is going to create unnecessary delays or result in incorrect assessments.”
Why ignoring the alert could create problems
Theron believes that there will be taxpayers who ignore the alert.
“This is not advisable. If you choose to ignore it and there are errors in the return it is highly likely that you will receive an assessment that you disagree with.”
He suspects SARS will not be too forgiving with taxpayers who ignored the alert and submitted incorrect or incomplete returns. Once a taxpayer receives the alert it is advisable to get help in understanding what must be done to get it right the first time.
“Ignoring or misunderstanding the questionnaire could result in unnecessary complications, including lengthy disputes with SARS.”
Double-check third-party information
Theron points out that some of the information submitted to SARS by third-party data providers such as your medical aid fund or retirement fund may contain errors.
“It is important to pay careful attention to the questionnaire and make sure that your return is accurate,” notes Theron.
Important Filing Season dates
Filing Season kicks off on 1 to 12 July for taxpayers who are being auto assessed. Non-provisional taxpayers must submit their returns between 13 July and 23 October and provisional taxpayers and trusts will have from 13 July until 22 January next year.
SARS advises provisional taxpayers to start preparing their tax returns well in advance to avoid rushed and incomplete submissions.
Who is most likely to receive a declaration alert?
Theron notes that people who are most likely to receive a declaration alert questionnaire are high wealth individuals and taxpayers with multiple income streams such as rental, interest and dividends.
Their tax returns are generally more complex, and prone to closer scrutiny from SARS.
“Receiving a declaration alert does not automatically mean that something is wrong. However, taxpayers should take the alert seriously, review the information carefully and seek professional guidance if they are uncertain how to respond. Addressing potential issues before submission is generally far simpler than resolving a dispute after an assessment has been issued,” Theron urges.