Tax returns: do the right thing or face the consequences

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Somaya Khaki | Project Director | Tax | SAICA Standards Division | mail me |


The Commissioner of the South African Revenue Services (SARS), Edward Kieswetter, briefed the media and stakeholders on 30 July 2020 to provide an update in terms of SARS’ plans in respect of the 2020 Filing Season. The theme for this year’s filing season is #YourTaxMatters.

In the current state that we find ourselves in, Kieswetter emphasised that #YourTaxMatters in the context of your tax makes a difference in the lives of the poorest of the poor.



For example, providing school meals for learners for whom this may be the only nutrition they can rely on and in the current pandemic, providing funding for the engagement and employment of front line health care workers as well as funding public health care facilities.

Auto-assessments

The SARS commissioner emphasised that part of the reason for changing the Filing Season dates was to allow SARS to implement the auto assessment process whereby SARS will rely significantly more on third party data to assess more than 3 million individual taxpayers.

Some of the thinking behind this new process is to:

  1. promote social distancing by creating a mechanism whereby taxpayers, with minimal work, will be able to fulfil their compliance obligations from the comfort of their homes, minimising contact with SARS agents within SARS branches, thereby ensuring safety of all;
  2. Assist compliant taxpayers by making compliance much easier thanks to the auto-population of information and related tax assessment which they can ‘accept’ at the push of a button; and
  3. Identify non-compliant taxpayers who are either just negligent or who have acted with criminal intent by not disclosing income and/or not submitting tax returns and therefore avoiding the payment of taxes.

According to initial plans, taxpayers who are being auto assessed were to receive SMSes with the auto assessment result between 1 – 31 August 2020.

Such taxpayers then have to access the SARS MobiApp or eFiling and either accept or reject the assessment based on a return that SARS will have populated using third party data received from employers, financial institutions, medical aids and other third parties.

Therefore, you would need to be registered on eFiling to fulfil this function.

Timelines

Some taxpayers have already had the opportunity to view their pre-populated returns since 30 July and this was just confirmed by the Commissioner today.



As at 7:00 on 30 July, 62,000 returns had been submitted, with 12% of those being selected for audit. SARS has already identified cases of taxpayers trying to commit fraud through various means – for example overstating deductible expenses.

Those not subject to the auto-assessment process will be able to start filing their returns from 1 September, with the below deadlines applicable:

  • 22 October – filing in a SARS branch.
  • 16 November – eFiling or MobiApp.
  • 29 January 2021 – provisional taxpayers filing via eFiling.

For corporate taxpayers, following engagement with SARS, the eFiling system is now open for filing of 2020 corporate tax returns.

However, this will only apply to those corporates that are not impacted by tax amendments promulgated in January 2020.

SARS commitments

The Commissioner made certain commitments to taxpayers to ensure a smooth filing experience this year.

Some of these include:

  • Continuous communication to remind taxpayers of their tax obligations.
  • Use of webinars, social media platforms and YouTube videos to educate taxpayers regarding their obligations, the auto assessment process and using electronic platforms instead of in-branch filing.
  • Almost 1,000 contact centre agents have been set up on virtual platforms to assist taxpayers remotely and SARS Help-U-eFile functionality is available
  • For those who insist on visiting a branch, they may make an appointment via the SARS website, but branch visits are being discouraged

Regarding the outcomes of filing, SARS will endeavour to:

  • Provide at least 8 out of 10 taxpayers with an assessment outcome in < 3 seconds
  • Pay refunds to 7 out of 10 taxpayers (if refunds are due) within 72 hours provided nothing else is required from the taxpayer to validate the refund
  • Be specific when requesting outstanding information – that is, the generic letters requesting information to support disclosures in your tax return is hopefully a relic of the past
  • SARS will endeavour to improve communication during the audit process and complete these timeously. However, taxpayers were also reminded that their collaboration in this regard is necessary

Do the right thing, or face the consequences

As noted earlier, one of the reasons for using auto assessments and relying even more on third party data is to identify errant taxpayers who either negligently, or intentionally do not comply with their obligations.



SARS information gathering powers are extensive and SARS will be using these powers to identify non-compliant taxpayers and will take steps to get them compliant.

In this regard, Kieswetter specifically noted that SARS will:

  • Step up its efforts to detect non-disclosure, communicate clearly and remind taxpayers to comply and give them the opportunity to correct their returns where necessary
  • Issue letters for late and outstanding returns and impose penalties as provided for in the Tax Administration Act, 2011, immediately after the deadline has passed
  • Enforce administrative actions in terms of TAA including prosecution if taxpayers fail to respond appropriately
  • Name and shame those taxpayers convicted of criminal offences

In general, SARS will act more decisively than ever before against those who do not comply due to negligence or criminal intent.

The message is clear – do the right thing, or prepare to face the consequences.


 



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