Latest news with #Sars
The Citizen
9 hours ago
- Business
- The Citizen
Tax season: Here is why you need to prioritise filing for returns
If taxpayers do not claim what they are entitled to, they are leaving money behind. When most people think of tax season, they often get a headache because they believe filing returns is a complicated process, and they decide not to file. Well, this is one of those things as an adult you should not pass on, because it will come back to bite you in the future. Taxpayers who decide to turn a blind eye to the tax season will be penalised, and whether they like it or not, the taxman will always have the last laugh, because they will need to pay for those penalties in the end. Ferné Nagy, executive financial advisor at ASI Financial Services, advises taxpayers to view tax season as an opportunity to take control of their financial story. Who should file for tax returns Tax season 2025 is scheduled to run until 20 October for non-provisional taxpayers and until 19 January 2026 for provisional taxpayers. If you are under the age of 65 and earned more than R95 750, you earned commission, freelanced, or side hustle income, sold assets with capital gains of more than R40 000, earned foreign income or held offshore assets worth more than R250 000, or received rental income or investment returns, then you are obligated to file for your tax return. All of these must have taken place between 1 March 2024 and 28 February 2025. Nagy says tax returns enable individuals to recover costs they have already incurred while earning their income. He warns that if taxpayers do not claim what they are entitled to, they are leaving money behind. ALSO READ: Sars makes changes to eFiling for easy use Tax return in the age of AI He adds that the South African Revenue Service (Sars) has made advances in automation through AI-powered auto-assessments. However, he warns taxpayers that auto-assessments are fast but not foolproof. 'Artificial Intelligence (AI) only sees what it's been fed. It cannot interpret your full financial picture like side hustle earnings, unreimbursed business expenses, or retirement top-ups. 'And when the data's incomplete, your return is too. Technology is a powerful enabler, but without human insight, it can cost you.' The catch in turning a blind eye Nagy adds that relying blindly on auto-assessments or ignoring your tax obligations can lead to costly mistakes, such as missed refunds or penalties. 'That is why being registered on eFiling and actively checking your return is so important. It gives you full control to make sure your return is accurate, complete, and truly reflects your financial reality.' Easy process The Citizen ran a test on how quickly it would take to file a return. Because eFiling's Wizard already had most of my information, I just had to answer yes or no to the questions, confirm my details, and enter the amounts I received during the tax season. All in all, it took less than 20 minutes. Within five minutes, my statement of account, detailing how much I will receive from the taxman, was available. However, the call centre is another nightmare. I had made a mistake first, and I needed clarity. I was on hold for 45 minutes, and I was still number 674 on the line when I gave up. If you need to call the call centre, the best thing to do is to request a callback. I'm not sure how long this would take. ALSO READ: Common pitfalls to avoid this tax season Fraud during tax season He adds that as filing becomes more digital, the stakes grow higher. 'Your tax return holds everything from your ID number to your income and banking details.' However, with cybercrime on the rise, thieves are not taking a break. 'According to Interpol, cybercrime costs the economy more than R2.2 billion annually due to the risks of data breaches, identity theft and financial fraud. 'This is where Sars eFiling becomes more than just a filing tool; it becomes your first line of defence.' The platform gives you full control to: Review your assessment Submit corrections Upload documents Track refunds Dispute errors Communicate directly with Sars Digital does not equal safety Nagy says people assume digital equals safe, which is not always the case. 'Security starts with how you use the tools. Cyber awareness is no longer optional; it's part of being financially literate.' Use strong, unique passwords for eFiling. Never click on Sars links in unsolicited emails. Always log in directly. Work with trusted financial professionals who prioritise data protection. 'Even if you were auto-assessed, you are still legally responsible for confirming that it is accurate. Accepting a flawed assessment could result in overpaying, underpaying, or triggering penalties down the line.' NOW READ: Estimated assessments: Sars's new 'cash-cow-grabbing' norm?
The Citizen
11 hours ago
- Business
- The Citizen
Estimated assessments: Sars's new ‘cash-cow-grabbing' norm?
Provision in the Tax Administration Act may be subject to abuse. Sars often prepares these estimates 'by comparing deposits into a bank account to turnover declared on the tax return'. Picture: AdobeStock The South African Revenue Service (Sars) has the power to raise estimated assessments when the information supplied by a taxpayer is considered incorrect or inadequate. The apparent subjectivity of the parameters used when issuing estimated assessments make the provision subject to abuse, argues Nico Theron, founder of Unicus Tax Specialists. The Tax Administration Act authorises Sars to issue an estimated assessment if a taxpayer fails to submit a return; submits a return or relevant material that is incorrect or inadequate; or fails to respond to requests for relevant material, even after multiple reminders. If any of these requirements is unmet, Sars may issue an estimated assessment, which is then based on its own calculations of the taxpayer's liability, says MaxProf auditor Debora Motana in a published article. ALSO READ: Are you making money with crypto assets? Sars is looking for you Troubling … Theron finds the subjective nature of the parameters for inaccurate returns or information or inadequate returns or information troublesome. 'If, for example, the taxpayer submits detailed information, but the Sars auditor does not understand it, is the information inaccurate? Perhaps not. Is it inadequate? Well, perhaps, for that auditor but perhaps not for the next one.' He says hypothetically the provision can be relied on when an accurate assessment is objectively speaking possible – but subjectively, the auditor may be snowed under or lack the expertise to get to an accurate assessment and revert to an easy way out, thereby shifting the workload to the taxpayer. ALSO READ: Economists say they are confident in Sars Methodology Theron notes that Sars often prepares these estimates by comparing deposits into a corporate taxpayer's bank account to turnover declared on the tax return. 'If the deposits are higher, they will typically propose to tax the difference. They will propose this even though it is trite that the sum of deposits in a bank account will seldomly yield the same number as turnover. 'This much, frankly, is ridiculously obvious to anybody with a basic understanding of commerce and accounting.' When Sars estimates a taxpayer's tax bill by comparing bank statements to turnover, the onus is on the taxpayer to prove – on a deposit-by-deposit basis – why the difference is not taxable. Theron argues that accurate assessments are to be preferred and that estimated assessments should only be raised as a last resort and not simply if the taxpayer failed to file a return, failed to respond to multiple requests, or submits information or a return that is inadequate or incorrect. Motana warns taxpayers to be vigilant in adhering to the requirements outlined in the provision (Section 95 of the act) that grants the power to Sars to make an estimated assessment. She also notes that the onus is on the taxpayer to demonstrate whether the assessment is valid or needs adjustment. ALSO READ: Tax season now open: Sars pays out R10bn in refunds after auto-assessments, you could be owed Court case Motana refers to an appeal case before the tax court in Johannesburg where Taxpayer RPC took an estimated assessment on appeal. It was not satisfied with the methodology used by Sars in determining the assessments. In its judgment in favour of Sars's methodology, the court quoted from the Africa Cash & Carry v Sars case where the tax court stated that an estimated assessment 'by its very nature' is subject to change based on an evaluation of the evidence and any information that becomes available. The tax court must place itself in the shoes of the functionary to determine whether the methodology followed and the assumptions on which the estimated assessments are based, are reasonable and produce a reasonable result. In the Taxpayer RPC case the court found that the methodology used by Sars is not expected to be precise, as long it satisfies the objective test. ALSO READ: Looming tax deadline and glitches cause frustration 'Cash-cow-grabbing norm' Theron says an organ of state such as Sars must act within the four corners of its empowering provisions. He questions whether the raising of estimated assessments is used as a last resort to protect the fiscus or whether it is used because it is effective and convenient. 'I can understand, from a business perspective, that estimated assessments might be used as cash-cow-grabbing norm. Indeed, we are seeing an increase in estimated assessments.' * Sars announced last week that it has issued auto-assessments to 5.8 million taxpayers, up from five million last year. Taxpayers have from 21 July until 20 October to file their tax returns or make changes to their auto-assessments. Provisional taxpayers have until 19 January to file their tax returns. This article was republished from Moneyweb. Read the original here.
The Citizen
a day ago
- Business
- The Citizen
Tax season now open: Sars pays out R10bn in refunds after auto-assessments, you could be owed
Tax season 2025 is scheduled to run until 20 October for non-provisional taxpayers and 19 January 2026 for provisional taxpayers. Taxpayers who were not auto-assessed by the South African Revenue Services (Sars) can start filing for their tax return from Monday, 21 July. The taxman completed auto-assessing taxpayers on 20 July, paying out more than R10 billion in tax refunds. Tax season 2025 is scheduled to run until 20 October for non-provisional taxpayers and until 19 January 2026 for provisional taxpayers. The taxman said it has already auto-assessed 5.8 million taxpayers for this tax season, which is an increase from the 5 million auto-assessed in 2024. NOW READ: Common pitfalls to avoid this tax season Tax refunds paid within 72 hours Taxpayers are encouraged to file for their tax returns to check whether Sars owes them, is they owe Sars, or if they broke even (no one owes the other). For tax season 2025, Sars has already paid out R10.6 billion in tax refunds within 72 hours after auto-assessments of taxpayers. 'With Auto Assessment, Sars uses data sourced from third-party data providers to assess taxpayers. In keeping with our aspiration to 'make tax just happen', taxpayers do not need to take any action when they receive an auto-assessment. 'For the few taxpayers that may need to update their tax returns with changes in case of outstanding information which Sars does not have, this can be done via eFiling or the Sars Mobi App.' Tax refund status The taxman said for those who submit their tax return online, an assessment outcome is issued in under five seconds if all is in order. However, only tax refunds of more than R100 will be paid into taxpayers' bank accounts within 72 hours once the assessment is completed. If taxpayers find out they owe Sars, they are urged to make payments as soon as possible or make payment arrangements. ALSO READ: Sars records increase in taxpayers who filed returns Sars Commissioner Edward Kieswetter noted that the improvement of their digital platforms is saving taxpayers' time and eliminating the need to travel to Sars centres. 'As we start with Filing Season for those not auto-assessed, I encourage taxpayers to use our digital channels rather than queue at our Service Centres.' Who must file tax return? People who must file an income tax return are South African residents and non-residents who earned income in South Africa during the tax year, as well as people who: Have capital gains, foreign income, or receive dividends not subject to automatic withholding tax; Have multiple sources of income, such as a salary and rental income; earn more than the tax threshold for the year, such as over R95 750 for under-65s in the 2025 tax year; Want to claim deductions, such as medical expenses, retirement annuities and travel allowances; Are provisional taxpayers – usually people who earn income not subject to pay as you earn (PAYE), such as freelancers, sole proprietors, or rental income earners. Beware of scams 'Sars urges taxpayers to remain extremely vigilant and keep their details confidential. There have been many attempts by scammers to defraud taxpayers. 'Taxpayers are reminded that sars will never ask taxpayers to use any link to engage with it. Taxpayers must protect their eFiling login details and use only registered tax practitioners.' Information on the latest scams can be found on the Sars website: To report or request information on phishing, taxpayers can send an email to [email protected]. NOW READ: Sars makes changes to eFiling for easy use
The Citizen
3 days ago
- Business
- The Citizen
How do you know you are ready to retire?
Retirement does not happen on the day of your 60th birthday anymore. These days you must be financially ready to retire. How do you know you are ready to retire? It is no longer a question of how old you are, but of how much you have saved to ensure you can have a comfortable retirement. Siphamandla Buthelezi, head of platforms at advisory firm NMG Benefits, says there is a moment in every career when you should stop asking, 'How much have I saved for my retirement?' and start asking, 'What now?'. 'Retirement is not the end of your financial journey but the beginning of a new one. While most of us spend decades building up our retirement savings, far fewer take the time to understand how to turn our savings into a reliable income, navigate new tax realities and properly plan our estate. 'This is why people approaching retirement must ask the right questions. The ideal time to start putting everything in place is five years before you retire. This enables you to make informed decisions, iron out any admin issues and understand the impact of your choices.' Here are the most important questions you should ask your financial adviser: What happens to my savings? Is it better to opt for a living annuity or a life annuity? Should you take a portion as a lump sum? Each comes with different income options, tax implications and risks. Buthelezi says If you choose a living annuity, you will have to decide on a realistic monthly drawdown rate and ensure your investments can keep up with inflation. 'A life annuity, on the other hand, offers guaranteed income for the rest of your life but comes at the cost of flexibility.' ALSO READ: South Africans are living longer and need to plan for longer retirement – here's how How will fees affect my income? Platform administration, investment management, and advice fees can significantly reduce your net income over time. 'Every rand spent on fees is a rand that does not support your lifestyle, and therefore, you should understand what you pay for and whether it is reasonable.' Are there tax implications? If you are behind on your taxes, Sars will deduct the outstanding amount from your savings before you receive a cent, Buthelezi warns. 'In addition, any lump sum you may take is taxed according to a sliding scale, although the first R550 000 is tax-free. Monthly drawdowns from living or life annuities are taxed just like any other income.' ALSO READ: Poor financial literacy about retirement costing SA and consumers millions What about medical aid? Unless your employer offers post-retirement medical benefits, your membership ends when your job does, he points out. 'Even if you are allowed to stay on your company's scheme, the portion that your employer may have been paying will likely fall away, leaving you to foot the full premium just as your healthcare needs start to increase.' Apart from the monthly premium, you must also plan for gap cover and chronic condition benefits. Does my will reflect my wishes? Buthelezi says you must ensure your will is up to date and your beneficiary nominations align with your intentions. 'If you are concerned about your future decision-making capacity, you should consider giving someone power of attorney to make financial and healthcare decisions on your behalf. This should not be given lightly. You must fully trust the person and understand what you are authorising.' ALSO READ: Looking for a retirement property? Here's what to look for Will my lifestyle be sustainable? A good rule of thumb is that your retirement income should equal 75% of your final salary, assuming that major expenses, like bond and car payments, have been settled. Buthelezi says this is where a detailed financial and lifestyle audit comes in. You must map out exactly what your income will be, what your expenses will look like and whether there are any shortfalls. He notes that retirement is not just about stopping work. 'It is about stepping into a new chapter with the confidence that your financial foundation is solid. And this process does not begin the day you stop working. It begins today, with asking the right questions.'
The Citizen
4 days ago
- Business
- The Citizen
AI powers Sars efficiencies, says Kieswetter at G20 Zimbali meet
But regulators caution against unchecked risk. Edward Kieswetter says Sars has used machine learning and AI to assess 65% of taxpayers without requiring them to submit a tax return. Picture: Moneyweb The South African Revenue Service (Sars) has had great success with its tax collection efforts, thanks to artificial intelligence (AI) – and the absence of overly rigid regulation of new technology. 'We are on a path that has no [precedent] and therefore one must balance the development of policy and practice,' said Sars Commissioner Edward Kieswetter on Thursday, when representatives of central banks, the Financial Sector Conduct Authority (FSCA), and the Organisation for Economic Co-operation and Development (OECD) took part in a roundtable discussion about the role of AI in financial systems. The discussion was a side event of the G20 Finance Track meeting, which is taking place at the Zimbali Resort in KwaZulu-Natal. 'If policy gets too far ahead of practice, we may in fact suppress the experimentation and the exploration of new technology,' Kieswetter notes. He says Sars has already used machine learning and AI to assess 65% of taxpayers – nine days into the tax filing season – without requiring them to submit a tax return. 'We've drawn only on third-party data and used machine learning, algorithms, and AI to perform the assessment and fraud risk detection.' Twenty years ago, it took Sars six months to assess six million taxpayers. 'This year, they will not have to file. And for the two million who choose to file, they will receive an assessment in under five seconds.' Within the first nine days of the 2025 tax season, Sars had already paid out R12 billion in refunds and raised R3.5 billion in assessments. Kieswetter notes that the use of AI also helped Sars prevent R5.5 billion in impermissible refunds. ALSO READ: Sars makes changes to eFiling for easy use 'New and complex risks' Opening the roundtable discussion on Thursday, South African Reserve Bank Governor Lesetja Kganyago warned that while AI holds significant potential for financial innovation and inclusion, it also introduces new and complex risks that make supervision challenging. 'Our mandate tends to converge on key fundamentals to safeguard financial stability, to uphold efficient operation of financial markets, and to deliver consumer protection. These are not abstracts, they are tangible promises we've made to our constituents.' Kganyago added that AI brings 'a profound duality – a landscape of immense opportunity interwoven with significant risk'. On one hand, it can enhance risk detection at both the institutional and system-wide levels, improve consumer credit scoring, and deepen inclusion. But these same tools can also amplify market shocks and perpetuate bias. Kganyago emphasised the need for regulators to remain committed to core mandates while adapting to new technologies. 'Technology will change. The tools we use will evolve beyond recognition. But our mandate remains constant – ensuring stability in the value of the monies of the people who are the users of the financial system.' ALSO READ: Sars records increase in taxpayers who filed returns AI adoption in South Africa's financial sector Katherine Gibson, divisional head at the FSCA, provided new insights from a soon-to-be-published joint survey conducted with the Prudential Authority. The survey covered nearly 2 000 institutions across banking, payments, insurance, fintech and more, to gauge how AI is being used across South Africa's financial sector. 'It reveals a sector that is cautiously optimistic about AI's potential, and, as expected, a range in the pace of adoption,' according to Gibson. In 2024, global financial sector investment in AI exceeded $50 billion (R892.7 billion), with projections to surpass $150 billion (R2.7 trillion) annually by 2028. She says locally, fintechs are leading AI uptake, with two-thirds already deploying it. Over 50% of banks have followed suit, while insurance and lending sectors are more reserved, with adoption rates under 10%. 'Banks are investing almost 20 times more than the rest of the sector.' ALSO READ: Economists say they are confident in Sars However, she stresses that with innovation comes responsibility. 'We must ensure that hyper-personalisation does not become a byword for hyper-exploitation and that generative AI chatbots are not mis-selling complex products to consumers who do not understand them.' She warns that some institutions have not implemented transparency safeguards. 'About one fifth of SA institutions reported not using any explainability models or methods for their AI models, which raises questions about transparency and accountability and consumer protection.' For many institutions, South Africa's data protection law (Popia) is seen as the top constraint to AI adoption. Gibson disagrees with the notion that regulation is a barrier. 'These are not barriers to innovation, but essential guardrails to ensure tech serves the public good.' ALSO READ: Sars gets AI to sniff out tax evaders OECD flags risk of market volatility OECD Secretary-General Mathias Cormann warns that generative AI brings growing threats of financial fraud, scams and cyber attacks – particularly as global financial markets become increasingly connected through similar AI tools. 'The use of AI in financial markets could also increase market volatility for a significant number of participants that rely on similar AI models, leading to a convergence of trade and feedback loops between models,' Cormann cautions. The OECD's most recent risk monitor found that AI use in credit assessments and insurance underwriting can compromise privacy and lead to discrimination. He says competition, rather than concentration, would be key to securing the benefits of AI in finance. This article was republished from Moneyweb. Read the original here.
