South African taxpayers have started getting notices from SARS – here’s what you need to know

The South Africans Revenue Service (SARS) hasstarted sending out SMSes to taxpayers about a possible discrepancy in their information.

Specialist firm Tax Consulting SA said that the message typically informs the taxpayer that they are being reviewed and that there are ‘discrepancies identified’.

It provided the below example:

Dear Taxpayer [Tax Reference Number XXX] SARS is in the process of reviewing discrepancies identified between third party data received and your last Income Tax Return submitted.

Please ensure the information captured on your 2020 Income Tax Return is accurate. eFiling and the SARS MobiApp are the easiest channels to use when submitting your tax return. Regards, SARS #YourTaxMatters”

This communication appears a result of SARS’ new three-phased automated filing process, explained Tax Consulting SA.

“During phase one, which ran from 15 April – 31 May, third party providers submitted information that will be used to auto-assess taxpayers.

“Third-party providers include employers, banks, insurers, retirement fund administrators, retirement funds and medical schemes.

“During phase two, which runs from 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.”

Tax Consulting SA said that the information can relate to anything from bank details to addresses.

As phase two 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, it said.

What should you do when you get this SMS?

Where third party data is incorrect, SARS has tasked taxpayers to correct this by updating their tax profile or by contacting the third party in question (not SARS) to ask them to correct the information submitted to SARS.

So, if you know where the discrepancy lies, this should be corrected. However, Tax Consulting SA said it is often not that simple.

“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.

“In this case, it appears that the taxpayer has no choice but to reject the automated assessment that SARS will issue based on the incorrect information. They will then have to file their return themselves in phase 3, 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.”

Read: A look at the new proposed taxes for South Africa

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