Filing is easy — tax is not
While Sars is simplifying how to file returns for taxpayers, it’s still an exacting task that needs to be right first time
Sars is simplifying how you do business with it, but local tax legislation isn’t simple, so you, as a taxpayer, need to make sure you submit the correct information on your tax returns.
Sars has access to a lot of third-party data such as salary and medical scheme information that it uses to fill in tax returns. So when you come to file your return, your information is already filled in. But you’ll still need to check that it is correct and there is no missing information, experts warn.
Delegates at the recent Tax Indaba, held in Sandton, heard details of the enhancements Sars has made to its eFiling and MobiApp intended to make it easy to file your return, and to move people from paper and branch filing to online filing.
Tshilidzi Magada, a senior manager responsible for strategy for individual taxpayers at Sars, says a lot of people still visit various branches. “The issue of high volumes, especially during filing season, remains one of our concerns.”
However, a panel of experts emphasise that you still need to be diligent and check the information on your return. “Taxpayers need to take an active interest in their affairs and not just blindly accept what is pre-populated on the return,” Neil Hughes, director at tax and auditing firm RSM SA, says.
He says there are three areas you need to pay attention to: preparation, filing and assessment.
As you prepare to file your return, gather all your supporting documents, check them for accuracy and keep them in one place. Documents to check include IRP5 certificates, to see if they are correct and what allowances or deductions are included — or excluded; and tax certificates from medical schemes to see if the contributions and rejected claims are accurately reflected.
All sorts of snags can come from not doing your taxes with due care and the necessary skill.BDO tax director Doné Howell
Maggie Mashigo, head of tax returns at Tax Consulting SA, says you must check that your IRP5s reflect the actual amounts for all deductions and amounts earned. Allowances for things such as travel require a log book for the allowance to be permitted. “If you are claiming rental income, ensure that you have supporting documents prior to submission as Sars will request these,” she says.
Magada says incorrect IRP5s must be corrected. “If you earned R1 and the IRP5 says R2, you must take it back and say it must be fixed,” he says.
Check that your banking and other personal details are updated, for example, your marriage status will impact how passive income, including interest, dividends and rental income, will be taxed, advises Mashigo.
Doné Howell, tax director at BDO, says that while Sars had made it very easy to file returns, tax legislation is not simple — tax is cumbersome, and the return is littered with tax jargon and legalese. “All sorts of snags can come from not doing your taxes with due care and the necessary skill.”
One example of misinterpreting data and questions shared by a Sars official is that some taxpayers fill in the rental they paid in the rental section, which is actually intended for those who own properties to declare the rental income they earn.
When it comes to travel allowances, taxpayers must make sure the opening and closing kilometre reading align with what is in their logbook.
Howell says taxpayers must remember that a tax return is a declaration, “so it must be true”. She highlights that there are punitive measures, such as fines, penalties and imprisonment, for taxpayers who don’t comply or make false declarations.
“If you have defaulted with a previous tax return — for example, not filing — you can use the voluntary disclosure programme to fully and honestly disclose your past tax affairs and rectify the situation,” she says.
Reading and understanding
For the final stage, Hughes emphasises the importance of reading and understanding assessments, and acknowledging and responding to any notices or verification requests in the time specified.
Magada says verification of one or more item occurs when the information Sars has from a third party differs from what is on your return.
“The process for verification [requests for more information] is automatic. So if the system picks up a discrepancy between third-party information it will flag this and automatically send a request to the taxpayer for further information, such as supporting documentation.”
A trained auditor reviews your supporting documentation against the information in the section under review. “If the info matches, then it’s done, but if it doesn’t, you can be subjected to a full audit, resulting in ‘back and forth’ between you and Sars,” says Mashigo, adding that you have 30 business days to lodge a dispute against a Sars assessment if you’re not happy.
Deadlines for branch filing and eFiling for individuals are October 31 and December 4 2019, respectively.
Meanwhile, the Sars enhancements to eFiling include a new landing page with details of past returns, a call-me-back feature, and an easier way to re-set passwords (you no longer have to remember things such as your favourite holiday destination).
For security, a one-time pin has been introduced and you can set your own user name. A key enhancement this year is the MobiApp on which you can submit your return if your tax affairs are simple.
Marcia Ujobolo, senior specialist for customer experience at Sars, says future enhancements the revenue service is looking at include allowing taxpayers with complicated affairs and trusts on the app, but not farmers as farming “is very complicated”.