Sars is undergoing a significant transformation with the introduction of automated tax assessments driven by AI. This article explores the implications of these changes for taxpayers, including the benefits and potential pitfalls of relying on automated systems.
Image: Timothy Bernard / Independent Newspapers
Sars modernisation is fully underway. Both new Commissioner Ngobani Johnstone Makhubu and prior Commissioner Edward Kieswetter have repeatedly stated that this modernisation will be driven through automation, especially AI.
The rise of auto assessments
The rapid growth of auto assessments has become one of the clearest signs of the Sars’ shift toward a more automated, data-driven model of tax administration. Instead of waiting for every individual taxpayer to complete and submit a return, Sars increasingly uses third-party data to calculate a taxpayer’s position in advance. For many salaried taxpayers with relatively straightforward affairs, the result is a mainly or wholly complete assessment issued at the start of filing season.
The scale of the programme is expanding quickly. In the 2025 filing season, Sars reported that 5.8 million taxpayers received auto assessments, up from 5 million in 2024. Sars also reported that 99.6% of the auto assessments remained unchanged by taxpayers, while R10.6 billion in refunds had already been paid within 72 hours. These figures suggest that auto assessments are no longer a peripheral convenience; they have become a central operating model for large portions of the individual income tax base. Sars is now seeking to prepopulate roughly 6 million taxpayers each year, including taxpayers required to provide simple provisional returns.
For Sars, the importance of auto assessments lies well beyond taxpayer convenience. Auto assessments reduce friction in the filing process, lower the volume of manual returns that need to be processed. In terms of enforcement, auto assessments allow Sars to focus its enforcement and verification resources on higher-risk or more complex cases. Auto assessments also support Sars' broader ambition to “make tax just happen”. In this model, the filing season becomes less about collecting basic information from millions of taxpayers and more about validating data, identifying exceptions and managing risk.
Third-party data
Auto assessments (and prepopulated returns) are largely based on the information Sars can reliably obtain from third parties. This third-party information typically includes employment income and PAYE reflected on IRP5 or IT3(a) certificates, interest and investment income reported by financial institutions, medical scheme contributions and tax credits and retirement contribution data. In practical terms, the system works best where the taxpayer’s income and deductions are visible through institutional reporting and where no additional sources of income or complex claims exist that Sars cannot independently verify.
This limitation is also important. Auto assessments do not mean Sars always has a full picture of every taxpayer’s affairs. Rental income, freelance or business income, foreign income, certain capital gains, crypto-related transactions, out-of-pocket medical expenses, section 18A donations, home office expenses and other taxpayer-specific deductions may not appear unless reported through the right channels or added by the taxpayer. Taxpayers therefore remain responsible for checking the assessment and filing a corrected return where the Sars calculation is incomplete.
Sars favours third-party data because it is generally more reliable than self-declared information supplied only at the end of the filing process. The attraction for Sars is therefore both administrative and strategic. Administratively, third-party data reduces manual capture, shortens processing times, supports faster refunds and lowers the number of routine queries. Strategically, it gives Sars a clearer view of the tax base. Tax evasion is accordingly reduced.
Automated engagement with taxpayers
Sars will undoubtedly turn to AI-generated engagement with taxpayers. The move is already visible in Sars' digital service channels, including the Sars website, Sars MobiApp, online query system, WhatsApp channel and the Lwazi AI Assistant. One can expect that Sars will generate a greater level of automated verification letters, audits, and other requests for information as opposed to personally driven notices.
The Good and the Bad
Automation is wonderful to the extent it works. The Sars e-filing system is one of the most advanced electronic tax compliance systems in the world. The work required for simple tax returns removes the burden for both Sars and taxpayers alike. Freedom from this burden of annual tax returns will be a blessing to many.
However, one must caution against the over-reliance on automation to the wholesale exclusion of human intervention. Automation does not mean complete abdication. The human touch is still required for proper review.
Blindly accepted automated numbers may come at unnecessary cost with taxpayers forfeiting eligible deductions and other available means of tax relief. Changing erroneous prepopulated electronic information can easily become a nightmare. While automation may drastically reduce the need for information at the return stage, taxpayers could face an onslaught of automated verification requests and other Sars interventions that could be far more intrusive.
The game is far from over.
PERSONAL FINANCE