SARS has typically been quick to refund taxpayers who have filed their tax returns and are due a refund, with money appearing back in their bank accounts smoothly and reliably, often within a day or two.
However since the opening of this tax season on 1 July 2014, the process appears to have changed and suffered a few hiccups along the way. From the queries we have received over the last month from multiple confused taxpayers, it would seem that thousands of refunds were first paid out, then reversed. In some cases this action happened not once, but twice, with evidence thereof appearing on their ITSA (Income Tax Statement of Account) showing several payments and reversal being performed by SARS. Originally these taxpayers did not get asked to submit supporting documentation (the dreaded “SARS audit”), but then received a letter from SARS telling them that they WERE selected for audit and must now submit supporting documents to SARS. According to SARS this was a systems glitch and has been rectified. However taxpayers now waiting for their refunds remain largely confused.
Recent communication between TaxTim and SARS reveals that the following new, extended procedure is now in place for situations where returns trigger a refund and require verification:
1. SARS will send a letter stating that verification is being performed to check the information taxpayers have against what they submitted. This process can take 30 working days to be completed.
2. SARS officials then audit / examine all the documents submitted against the information included in the ITR12 and adjust or keep the assessment as is.
3. A Completion Letter will be sent to taxpayers signalling the end of stage one of verification and whether any changes have been made to their assessment AT THIS STAGE. If a letter is received from SARS, taxpayers must not get too excited as this does NOT mean the journey is finished and your refund is coming.
4. After a Completion Letter is sent, SARS then applies a mysterious “risk analysis tool” (stage two) and selects taxpayers that may still have differing information and requests further supporting documentation either via a letter or phone call. This then gets sent to further auditors and the process can take another 30-60 days to complete. It is unclear as to what exactly the analysis tool looks for as SARS were unable to confirm this to us.
5. Once all this is complete, if SARS are happy, taxpayers will receive their refund. If not, then a further (stage three) manual audit is done which can take between 3 and 12 months to finalise. Unfortunately this is the system and taxpayers have no choice but to work with it and submit tax returns early and honestly, every year. With any luck your tax return will not be triggered for audit and you can enjoy your tax refund sooner rather than later.
For a simple tool to make tax returns easy, try TaxTim and get your maximum allowable refund the right way.
Marc Sevitz is the co-founder and director of Tax-Tim, an online digital tax assistant platform that simplifies your understanding of tax related issues and completes your tax returns for you. Marc has a BCom and Post Graduate Diploma in Financial Accounting and Tax Law from the University of Cape Town. He has worked for various companies within the Financial Services sector.