The “old” and “new” auto-assessments
Last year, SARS issued auto-assessments for taxpayers, which involved SARS pre-populating taxpayers’ tax returns. The relevant taxpayer would be notified by SARS to review these returns and, if correct, accept the submission or amend the return if any items were missing or incorrect.
This year, however, instead of taxpayers having to accept the auto-assessment for submission, SARS will now automatically submit the assessment and notify the taxpayer via SMS and as per the contact details reflected on your tax profile and the RAV01 form. If the data on the assessment is incorrect, the taxpayer will then have 40 business days to make a request to SARS for them to prepare and submit a corrected tax return.
Why are expats at risk?
Most expatriates are not aware of their SARS tax status, and many have not updated their contact details with SARS to reflect their new details. This is a serious concern, as SARS’ auto-assessment notice could easily be missed as a result. It means that expats may find themselves having, unbeknownst to them, filed an incorrect tax return (via SARS) and, in many cases, this could lead to them being overtaxed or undertaxed, possibly leading to further penalties and interest, or even criminal prosecution in certain cases.
A further risk is where an auto-assessment is done by SARS and there is a liability, in which case SARS penalties may be charged and interest will accrue for any late payment if not received within the grace period provided by SARS.
When it comes to tax in South Africa, SARS correctly follows the principle that ignorance is no excuse in law. This should also be considered in view of the fact that negligence in failing to properly comply with one’s tax obligations is now considered a tax offence, making it easier for SARS to prosecute. For example, a failure to notify SARS of a change in registered particulars, or any material facts, or to submit a return as required, may result not only in penalties and interest, but also a fine or imprisonment for up to 2 years.
Being proactive, not reactive
If you are unsure if your correct contact details are up to date with SARS, it is worthwhile getting a tax diagnostic done on your tax position to ensure everything checks out. For expatriates, this would mean ensuring that your foreign income has been properly declared and, if you regard yourself as a non-resident for South African tax purposes (i.e., not liable for South African tax on foreign-sourced income) then it also means that you need to be sure that your status properly reflects on the SARS system – this does not happen automatically.
With filing season now open as of 1 July 2022 and with it closing earlier than other years on the 24th of October 2022 it has become even more of an imperative for expatriates (and taxpayers at large) to stay ahead of the curve and ensure that they obtain the first-mover advantage, before being caught out by a SARS auto-assessment.