Auto-assessments ‘won’t do away’ with tax practitioners

Simnikiwe Mzekandaba
By Simnikiwe Mzekandaba, IT in government editor
Johannesburg, 06 Nov 2023
Despite mixed reviews, SARS continues to ramp-up auto-assessments for tax returns.
Despite mixed reviews, SARS continues to ramp-up auto-assessments for tax returns.

Despite concerns that the South African Revenue Service’s (SARS’s) auto-assessments are negating the need for tax practitioners, they still provide value.

So says Mark Kingon, head of stakeholder relations at SARS, speaking during a panel discussion at last week’s Accounting iNdaba 2023.

Hosted by the South Africa Institute of Professional Accountants (SAIPA), this year’s iNdaba was themed: “Mastering the demanding environment: The power of agility and ethical practices in accountancy”.

The annual event brings together finance industry players, to unpack subjects relevant to the accounting landscape, especially as it relates to technology and taxation.

For the panel discussion, the panellists unpacked and shared their thoughts on “the future of taxation in the age of digital transformation”.

Over the last few years, SARS has modernised its systems and payment processes to address tax compliance, adding other digital channels to its eFiling system.

This includes auto-assessments, a journey that started a while back, said Kingon. “Our dream was to issue you [the taxpayer] with an invoice for your tax without you having any role to play in that. That’s been our dream all along.

“We got to a point with our data integrity, with regards to third-party data, that we had to move to the next step.”

Auto-assessments are issued to taxpayers whose tax affairs are considered “less complicated”. Despite mixed reviews, the last three years have seen the revenue authority ramp-up the issuing of auto-assessments.

SARS uses data received from employers, medical schemes, banks, retirement annuity funds and other institutions. The data is then used to calculate a tax assessment for the taxpayer. If SARS is satisfied the data and tax calculation is correct, it will issue the assessment to the taxpayer via eFiling or the SARS MobiApp.

At the same time, SARS sends a message via a preferred channel of communication (SMS or e-mail) to let the taxpayer know the assessment on eFiling or the SARS MobiApp is ready to be viewed.

SARS’s 2022/23 annual report shows it achieved a target of 94.7% (2.90 million people) auto-assessments, against a target of 90%. During the 2021/22 period, SARS achieved a target of 91.03% for standard taxpayers’ auto-assessments.

According to Kingon, SARS cannot have long queues of people waiting to be assisted manually.

“If we can, through digital transformation, change that behaviour – that people don’t have to queue, waste a day’s leave to go fill in a return which can simply be provided – that’s where we want to be,” he stated.

“We do believe auto-assessments are for the benefit of the citizenry, but also for us so that we can reduce our volumes.

“I think this is a journey. One must not see this negatively but as an opportunity for greater value-add for clients.”

Stepping into the future

Etienne Retief, chairman of the tax committee at SAIPA, added that data is essentially the heart of it all. He noted that the move is going to probably be the most important transformation for both the tax practitioner and tax revenue authorities.

“Despite the mixed responses to auto-assessments, they are changing the environment and have created a shift in how many returns are being filed without the need to prod the taxpayer.”

Commenting on the biggest problem tax practitioners will need to deal with in the next few years, the panellists agreed they will need to find ways to adapt in the digital transformation age.

They added that a practitioner’s position needs to transcend beyond the completion of a tax return.

Khanyisa Cingo-Ngandu, head of tax at SNG Grant Thornton, stated: “I don’t think we can move away from the changing way of doing business and the changing way of life. If the majority of your business in practice was focused on doing data clean-up…you now need to start refocusing on actually interpreting the tax legislation, which is the value-adding work that tax practitioners should be doing anyway.

“Anything that can be automated should be automated – this is makes it easy for the compliant taxpayers. If you can have an efficient way to make it easy for compliant taxpayers or those who want to comply, then have it.

“With all the data that is available, go after those who don’t want to comply. This is a good thing for tax practitioners because now their customer base increases because you’ll have the people that are willing to comply and the ones that are forced to comply because SARS will bring all the data to you for assistance.”

Firdoze Abdool Sattar, associate director at Deloitte Africa: Tax and Legal, added: “One of the biggest challenges is the mindset and having a budget. A lot of times in the working environment, tax is always a little function and has not been part of the strategic business areas.

“The challenge that will come is that big organisations will need to recognise that it’s not only the tax practitioner’s responsibility, it becomes a wider organisation responsibility. Tax definitely needs to be part of the transformation.

“If you are going onto a new SAP or Oracle system, it is to ensure tax is not left behind, because where data is not compliant, taxpayers are going to struggle to be compliant.

“Digital transformation is in the right space and will create a seamless process for taxpayers and practitioners.”