Auto-assessment: Everything South Africans need to know about their tax returns

This July, millions of South Africans were greeted with an unexpected surprise in their inboxes and SMS notifications — their tax returns had already been prepared for them by the South African Revenue Service (SARS). For many, this shift to auto-assessments has felt like a welcome relief from the burdensome wait, lengthy queues, and often complex paperwork associated with filing taxes. However, as the excitement settles, many are left wondering: can I really trust a tax assessment I didn’t prepare myself?

SARS officially launched its auto-assessment notices between July 1 and 12, announcing that nearly 1.9 million taxpayers had been auto-assessed as of July 2, resulting in an estimated R8 billion in refunds issued. This new programme extends beyond salaried employees to also include eligible provisional taxpayers, marking a significant evolution in the way taxes are handled in South Africa, says Jenna Wilson-Jenkins, an associate at Shepstone & Wylie Attorneys.

Understanding auto-assessment

But what exactly is an auto-assessment? Wilson-Jenkins says essentially, it is SARS's initiative to compile your income tax return using data gathered from various third-party institutions, such as employers, banks, medical schemes, retirement fund administrators, and other approved data providers. When SARS is confident that the information it has received is complete and trustworthy, it prepares an assessment on your behalf, eliminating the need for you to log onto eFiling to fill out forms.

Wilson-Jenkins says it’s critical to understand that receiving an auto-assessment is not a waiver of your tax obligations — nor is it based on guesses. Instead, it’s a meticulous data-matching exercise wherein SARS constructs your tax position from the information reported by these third-party entities. Auto-assessments are only applicable to certain taxpayers; if your particulars on eFiling are incomplete, or if you have income that isn’t documented by a third-party institution — such as freelance work or rental income — you will not qualify.

If you didn't receive a notification by July 12, non-provisional taxpayers are required to manually file their tax returns between July 13 and October 23, with provisional taxpayers and trusts given until January 22, 2027.

Should you accept or scrutinise your auto-assessment?

This brings us to a pivotal question: should you simply accept the auto-assessment or should you take the time to review it carefully? Wilson-Jenkins says the answer lies in your confidence level regarding the completeness of the data IRS possesses.

• If your sole income for the year was from your salary, your tax matters are relatively uncomplicated, and if you have no additional deductions beyond what has been reported, you may choose to accept the auto-assessment as correct.
• However, agreeing with the auto-assessment does not absolve you of your responsibility. The accuracy of your tax return is ultimately your obligation under the Tax Administration Act.
• Failure to verify or correct inaccuracies found in an auto-assessment may render you liable for penalties and interest in the future.

To ensure due diligence, it is recommended that every taxpayer who receives an auto-assessment logs onto SARS's eFiling or the MobiApp to review the assessment and the underlying data before making a decision.

Key aspects to consider during review

When conducting your review, pay attention to the following:

• Missing income: If you earned additional income, such as freelance work or rental income, that SARS may not have captured, it's crucial to declare it manually.
• Unclaimed deductions: Be vigilant regarding potential deductions that might not be reflected, such as retirement annuity contributions or additional medical expenses.
• Medical aid and dependents: Verify the accuracy of your medical scheme contributions and dependent details, as this directly influences your medical tax credit.
• Banking details: Ensure that your banking information is correct for prompt refunds, especially if you've recently switched accounts.
• Amount owed or refunded: If you're faced with unexpected figures — be they unusually high or low — it's vital to further investigate the details.
• Scam awareness: Be cautious of potential fraud, as scammers often exploit the auto-assessment period. Remember that SARS will never ask for your sensitive information through unsolicited messages.

The final takeaway

While the auto-assessment system may provide remarkable convenience and the promise of swift refunds for many South African taxpayers, Wilson-Jenkins says it does not replace the necessity for careful review and due diligence. The move towards digital convenience should not be a shortcut to neglecting your responsibilities. Taking a few moments to review the figures against your own records can save you from potential headaches in the future. Remember, the choice remains in your hands, and with it, the responsibility for your tax affairs.

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