In 2020, The South African Revenue Service (SARS) started implementing the SARS auto-assessment system to simplify the tax filing process for individuals. This initiative is quite revolutionary, aiming to streamline tax assessments by automating the process. Making it easier for taxpayers to fulfil their tax obligations. But what exactly is the auto-assessment system, and how does it work? Let's dive into some details and discuss a few benefits of this system to help you better understand the process.

What is the SARS Auto-Assessment?

The SARS auto-assessment is an automated process where SARS evaluates tax returns for individual taxpayers based on data received from third-party sources. These sources include employers, financial institutions, medical schemes and annuity providers. The goal is to reduce the manual effort required from taxpayers, which in turn, should minimise errors in their tax returns.

The Vision Behind Auto-Assessments

The goal of the auto-assessment is to leverage technology and data to make tax compliance more manageable and more efficient. By automatically gathering information and generating assessments, SARS aims to reduce the burden on taxpayers while improving the accuracy of their tax returns. This system is part of SARS’s broader effort to modernise tax administration and enhance service delivery.

How Does the Auto-Assessment Process Work?

1. Data Collection: Throughout the year, SARS collects data from various third-party sources. This includes salary information from employers, contributions to medical schemes, retirement savings and other relevant financial data.
2. Notification: If you have been selected for an auto-assessment, you will receive a notification via SMS or email. This message will inform you that an auto-assessment is available for review on your eFiling profile or the SARS MobiApp.
3. Review: Once notified, it’s important to review the auto-assessment carefully. Check all the information provided to ensure its accuracy and completeness.
4. Acceptance or Amendment: If you agree with the auto-assessment, you can simply accept it, and your tax filing for the year is complete. If there are any discrepancies or missing information, you have the option to edit the return and submit the necessary corrections.
5. Finalisation: After accepting or amending the auto-assessment, you can submit your return to SARS. If any additional taxes are due, you will need to make a payment by the specified deadline.

The Advantages of Auto-Assessments

The introduction of auto-assessments has several positive effects:

• Time Savings: Auto-assessments can save a lot of time by reducing the need for manual data entry and eliminating paperwork. This process allows taxpayers to complete their tax returns quickly. 
• Reduced Errors: With data directly sourced from third parties, the chances of errors are minimised.  This leads to more accurate tax returns and fewer corrections.
• Simplified Process: For many taxpayers, the auto-assessment system simplifies the filing process, making it far more accessible and less daunting. 

The Importance of Consulting a Tax Practitioner

While the auto-assessment system offers many benefits, it's still crucial for taxpayers to take responsibility for their tax returns. Without a background in finance, this can be quite challenging. So here’s why consulting with a tax practitioner remains essential:

• Accuracy and Completeness: Making sure the information SARS has is correct and complete is your responsibility as a taxpayer. A tax practitioner can review your auto-assessment and help identify any discrepancies or missing information. This is especially important for individuals with multiple revenue streams, as it is likely that SARS may not receive information from every source of income.
• Expert Advice: Tax practitioners have the expertise to provide advice on tax matters. They will ensure you are compliant with the latest regulations while maximising your tax benefits.
• Peace of Mind: By consulting with a tax practitioner, you gain exceptional peace of mind knowing that your tax return has been thoroughly reviewed. This will help you avoid issues with SARS in the future, and you won't have to lose sleep over any potential penalties.

At Booysen Accountants, we fully support the SARS auto-assessment initiative and believe it is a step in the right direction for simplifying taxes for all South Africans. Nevertheless, we also advise taxpayers to take a proactive approach to ensuring their tax returns are accurate. While the SARS auto-assessment system offers significant advantages, it’s still important to engage with a tax practitioner. By consulting with us, you can be confident that your auto-assessment is correct and complete, ensuring your tax return complies with all the regulations.