• Some taxpayers are getting SMSes from the SA Revenue Service, warning them about discrepancies on their 2019/20 income tax return.
  • This could be part of the new automated filing process, and may be as innocuous as incorrect bank or address details
  • But it could also mean that SARS believes you may not have declared all your income.
  • For more articles, go to www.BusinessInsider.co.za.

Some South African companies and individuals are getting SMSes from the SA Revenue Service, warning them that discrepancies between third-data received and their 2019/20 income tax return are being reviewed.  

An example of an SMS received by a taxpayer

“Third parties” refer to employers, banks, insurers, retirement fund administrators, retirement funds and medical schemes.

The SMS is causing some stress among recipients, but also confusion:

The SMS may be part of SARS’ new three-phased automated filing process, says Jean du Toit, tax attorney at Tax Consulting SA.

This year, SARS will automatically complete a large group of taxpayers’ returns with all the information it received from third parties. These taxpayers will receive an assessment, and if they accept it, won’t have to file a tax return at all.

READ | This year, SARS may ‘auto-assess’ your tax return – here’s what you need to know

During “Phase 1” (15 April – 31 May), third party providers submitted information that will be used to auto-assess taxpayers, says Du Toit.

In the next phase (1 June – 31 August), taxpayers and tax practitioners were asked to do “hygiene checks” of their taxpayer information, meaning they have to ensure their information on their tax profile is up to date, to avoid mismatches with data provided by third parties. Du Toit says the information can relate to anything from bank details to addresses.

“As Phase 2 progresses, SARS is informing taxpayers where they have picked up discrepancies between information they have on file and data submitted by third parties, which would prompt the communication in question,” says Du Toit, referring to the SMSes.

But the message from SARS could also refer to any income - for example, interest, dividends and capital gains - that you did not declare in your previous return. For example, you may have an online trading account with a bank, and didn’t declare the gains in your share portfolio. The bank will submit details about these gains to SARS.

What to do

If you received one of these messages, and you have not received an additional assessment from SARS, the first thing to do is to review your tax return from last year, says Joon Chong, a tax specialist and partner at Webber Wentzel. Check whether you have fully declared all income and capital gains on the return.

Should you not have declared all your income or capital gains, you can do a correction via eFiling, or you can request a new ITR12 form (income tax return), and resubmit, says Chong.

You may, however, have to pay penalties and interest.

But Du Toit warns that it may not be easy to pick up discrepancies, and that the fault may lie with the third party.

“We have seen time and again that the third-party information provided to SARS lacks integrity. A not uncommon example is where SARS assesses or queries a taxpayer on interest seemingly not disclosed, based on information obtained from a bank, even though the taxpayer has no interest income from that bank.”

Incorrect third-party information causes a lack of integrity, and this places an unfair administrative burden on the taxpayer and SARS, he adds.

"The time may not be too far off where SARS issues a third party provider with a heavy penalty for incorrect information. This medicine works well on normal taxpayers. Where SARS puts one in jail, there are thousands who voluntarily fall in line," says Du Toit.

If you do pick up an error in third-party information submitted in your automated assessment, you have to reject the filing and file your own return in Phase 3 of the new automated returns system, which commences on 1 September 2020. "It remains a criminal act under the Tax Administration Act to make a false declaration and by ticking a box, knowing there is a likely mistake, is simply not a good idea," Du Toit adds.

 

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