Preparing for Sars audits: what you need to know for tax season 2026

As South Africa’s 2026 tax season approaches (March 1, 2025 – February 28, 2026 assessment), individuals, trustees, and small to medium-sized enterprises (SMMEs) are preparing to submit their returns. While filing accurately and on time is essential, many taxpayers overlook one important reality: even fully compliant taxpayers can be selected for a South African Revenue Services (Sars) audit.

Audits Are Becoming More Common

Sars continues to enhance its compliance capabilities through advanced data analytics and Artificial Intelligence (AI). With additional funding from the National Treasury and increasingly sophisticated systems, Sars is able to cross-check information from multiple sources - including employers, banks, medical schemes, and investment platforms. This means discrepancies, even small or unintentional ones, are more likely to be flagged.

For individuals, this could involve:

• Travel allowance, home office claims, or rental income declarations.
• Provisional tax submissions.
• Capital gains calculations on property or shares.

For trusts:

• Distribution allocations.
• Capital gains tax treatment.
• Beneficiary tax implications.

For SMMEs:

• VAT submissions.
• PAYE and employee tax compliance.
• Income tax and expense deductions.

An audit does not automatically imply wrongdoing. In many cases, it is part of routine compliance checks and often results in incorrect tax reassessments, whereby Sars unfairly demands additional tax payments from you. The process can be lengthy, technical, and stressful.

 The real cost of an audit

Audits are becoming more detailed, and disputing incorrect or unfair demands by Sars can take months - sometimes up to a year - to finalise. Responding to an audit and resolving disputes often requires detailed document retrieval, formal written submissions, technical tax opinions, meetings or hearings with Sars and possible objections or appeals.

While many taxpayers rely on trusted accountants for annual submissions, a full audit or dispute may require specialist tax practitioners or legal experts. These professional fees can quickly add up - even if Sars ultimately finds that everything was correctly declared. For individuals and SMMEs without in-house finance teams, these costs can place real strain on cash flow.

Why it matters for smaller taxpayers

Larger corporations often have internal tax departments and legal teams. Most individuals, trusts, and smaller businesses do not. Having a solution like this helps level the playing field by giving policyholders access to experienced tax professionals who understand both the technical legislation and the procedural requirements of Sars. This ensures that:

• Your rights as a taxpayer are protected
• Submissions are technically sound
• Deadlines are met
• Objections or appeals are properly structured

Once cover is in place, it applies regardless of how far back Sars decides to review your records, and multiple claims can typically be made within a policy year if necessary.

A practical step for tax season 2026

As you prepare for tax season 2026, it’s worth asking:

• Are your records up to date and well organised?
• Do you understand the deductions and claims you’re making?
• Could you comfortably absorb professional fees if Sars selected you for review?

Being prepared is about more than filing on time. It’s about understanding your exposure and ensuring you have the right support in place should you need it.

In an increasingly audit-driven tax environment, proactive planning can provide peace of mind, replacing uncertainty with the assurance that, if Sars does come knocking, you won’t be navigating the process alone.

* Milne is the chief broking officer at Aon South Africa.

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