SARS Tax Season 2020 Updates: What You Need to Know
Important Notes For Personal Income Tax and Company Income Tax Taxpayers
In May this year, the Commissioner of the South African Revenue Service (SARS) announced changes to the 2019/2020 tax filing season for individual taxpayers.
The mainly operational changes come as a response to the effects of the COVID-19 pandemic and social distancing requirements. They comprise of adjusted and deferred filing deadlines and requirements.
This years’ tax filing season will open in September, two months later than usual, but new auto-assessments will be issued in August.
Instead of you preparing your return, SARS will now gather third party data to compile your return for you. You will receive an auto-assessment, which, if accepted, means that you don’t have to file a return. We caution against accepting the auto-assessment as it may not include all your tax certificates or claimable deductions.
In light of the anticipated R300 billion collection shortfall, taxpayers can expect heavy-handed policing from the receiver. We strongly recommend preparing in full ahead of auto-assessments and the official opening of the personal tax filing season.
Individual Income Tax Changes
In an effort to simplify tax return filing requirements for individual taxpayers and curb branch visits, SARS announced a phased approach that started in April 2020 and will end in January 2021.
Phase One: Employer and Third-Party Filing, April 15 2020 – May 31 2020 (Complete)
Third-party providers include employers, banks, medical savings and insurance schemes, and financial companies that provide pension funds and retirement plans.
Employers who are liable for Pay As You Earn (PAYE) that have not yet met their filing and payment obligations may be criminally charged.
Phase Two: Tax File Updates and Auto-Assessments, June 1 – August 31 2020 (Underway)
SARS is currently validating the third party data. Employers and other third-party data providers that did not make the May submission deadline or have outstanding returns after failing to meet SARS’ verification requirements can expect follow-ups from the receiver.
Taxpayers are encouraged to engage with SARS to ensure that their personal tax data is up to date. Namely, banking details, postal and physical address, marital status and name changes and the like. This is of particular importance because If your details don’t match that on your tax certificates and other third-party data, it can cause payment delays. You can update your details online.
SARS will issue Auto-assessments to qualifying individual taxpayers. If you are auto-assessed, you can expect an SMS from SARS to alert you that your completed return is available in eFiling or on the SARS mobile app. Read more here: https://www.businessinsider.co.za/sars-may-auto-assess-your-tax-returns-2020-6
If you accept the assessment and a refund is due, it will be paid into to your bank account. If you don’t accept the auto-assessment (advisable), you can file your submission as per usual when the season opens in September.
As the system is new, it may not take all the deductions, donations and other claimable expenses into account. You could potentially miss out on the full refund due to you. It would be wise to seek the help of a professional personal tax practitioner to verify the completeness and accuracy of your return.
Phase Three: Employee Filing Applicable to PIT, September 1 – January 31 2021
Non-Provisional taxpayers, who were not auto-assessed or disputed their assessment, have from September 1 to November 16 to file online.
If they cannot file electronically, they can submit at a branch (by appointment) from September 1 to October 22.
Provisional Taxpayers, who file electronically have from September 1, 2020, to January 31, 2021, to file their tax returns.
Considerations for Businesses
As Beatrice Gouws of the South African Institute of Tax Practitioners (SAIT) explains, SARS is shifting from being “predominantly ‘tax return assessment’ focused to being more focused on anticipatory third-party data risk and verification assessment.” Our interpretation is that third-party data providers now hold more accountability and responsibility than ever before. Thus, adding more compliance strains on companies.
To avoid entanglement from the imposed bureaucratic burdens, it is imperative that organisations set compliance measures into their HR, Payroll and Financial processing systems from the onset.
For corporate tax compliance and reporting peace of mind, speak to us at https://www.exceed.co.za/contact-exceed/