What should you know about Auto Assessment?
What should you know about Auto Assessment? What is an auto-assessment? An auto-assessment is an automatic assessment issued on taxpayers by SARS. This basically means that SARS has collected taxpayer information from their parties (such as medical aid or retirement annuities) and then use this information to file your return and issue an assessment on this return automatically without your involvement. How will you know if you are auto-assessed? You should receive an email or SMS from SARS informing you that you have been selected for auto-assessment. The process started in July 2022. But, this is not the first time SARS has issued an auto-assessment. They also issued these in the 2021 tax year. What should I do if I receive an auto-assessment? SARS says if you agree with the aut0-assessment, you do not have to do anything. However, should you be in disagreement, you have just 40 working days from the date of assessment to file a correction (edited tax return.) What happens if you miss the 40 days? If you do not do anything, SARS assumes you are in agreement with the auto-assessment. The assessment becomes your final assessment at the expiration of the 40 business days. Can I request an extension? If you feel the 40 working days are too little, you can request an extension on eFiling before the 40 days have expired. SARS will require “reasonable” grounds for the request. if you miss the deadline, you will have an additional 21 working days to submit a request for an extension on the same terms. If both 21 and 40 days have passed and you still were not able to submit a correction, you will need to provide “exceptional circumstances” to justify a delayed request for extension. NOW TO THE BIG QUESTION, SHOULD I ACCEPT THE AUTO-ASSESSMENT? We think this is a risky move if (and SARS may not pick up these things on an auto-assessment:) 1. You have qualifying donations you would like to claim 2. You have qualifying out-of-pocket medical aid expenses 3. Your medical aid is being paid for by someone who is not the principal member (normally the person paying for the medical aid would be the one to claim the medical tax credits.) 4. You have capital gains on assets that you sold that fall outside the scope of an auto assessment 5. You are a crypto or share trader 6. You have a side business or rental income (profit or loss) 7. You have and qualify for a home office expense claim (deductions) 8. You would like to claim your business travel kilometres 9. SARS missed one or some of your retirement annuity funds Contact us: Was this helpful? Would you like us to do your tax return? Get in touch with us: Leave a message/ get a quote Subscribe now:
Credit notes under scrutiny, are you complying?
What we have seen now is increased scrutiny of credit notes for compliance with the VAT Act. The main challenge is that in most instances accounting packages being used by businesses do not contain all the information required on a credit note by the VAT Act. It is therefore important that businesses and accountants ensure that credit notes comply with the Act before they are issued and before VAT claims are submitted. Otherwise, it will be difficult for businesses to get back their legitimate VAT claims. Key elements that must be found on the credit note are the following: Vendor details (names and addresses, VAT registration numbers for both the issuing and receiving party) The words “credit note” must be clearly stated on the document being issued A brief description of the circumstances that gave rise to the credit note. Now this one is critical and what you may find is that some accounting systems do not allow for this. We would encourage you to add this narration to the description part of the credit note. Information sufficient to identify the original transaction to which the credit note relates, that is the original invoice that is being credited. In other words, if someone else who is not familiar with your records comes to check the credit notes, they should be able to trace its origins with ease. It would also be very important to make sure that the correct VAT rate is applied. If the original invoice was issued before the VAT rate changes to 15%, then the credit note should also be at 14%. One cannot claim back more than what they declared. In more detail and in terms of Section 21(3), of the VAT Act, a credit note must contain the following particulars: (i) The words “credit note” in a prominent place; (ii) the name, address and VAT registration number of the vendor; (iii) the name, address of the recipient. And where the recipient is a registered vendor, the VAT registration number of the recipient; (iv) the date on which the credit note was issued; (v) either— (aa) the amount by which the value of the said supply shown on the tax invoice has been reduced and the amount of the excess tax; or (bb) where the tax charged in respect of the supply is calculated by applying the tax fraction to the consideration, the amount by which the consideration has been reduced and either the amount of the excess tax or a statement that the reduction includes an amount of tax and the rate of the tax included; (vi) a brief explanation of the circumstances giving rise to the issuing of the credit note; (vii) information sufficient to identify the transaction to which the credit note refers; (b) the actual tax charged in respect of the supply concerned exceeds the tax shown on the tax invoice as charged, the supplier shall provide the recipient with a debit note, containing the following particulars: (i) The words “debit note” in a prominent place; (ii) the name, address and VAT registration number of the vendor; (iii) the name, address and, where the recipient is a registered vendor, the VAT registration number of the recipient, except where the debit note relates to a supply of goods in respect of which a tax invoice contemplated in section 20 (5) was issued; (iv) the date on which the debit note was issued; (v) either— (aa) the amount by which the value of the said supply shown on the tax invoice has been increased and the amount of the additional tax; or (bb) where the tax charged in respect of the supply is calculated by applying the tax fraction to the consideration, the amount by which the consideration has been increased and either the amount of the additional tax or a statement that the increase includes an amount of tax and the rate of the tax included; (vi) a brief explanation of the circumstances giving rise to the issuing of the debit note; (vii) information sufficient to identify the transaction to which the debit note refers: Provided that— (A) it shall not be lawful to issue more than one credit note or debit note for the amount of the excess; (B) if any registered vendor claims to have lost the original credit note or debit note, the supplier or recipient, as the case may be, may provide a copy clearly marked “copy”; (C) a supplier shall not be required to provide a recipient with a credit note contemplated in paragraph (a) of this subsection in any case where and to the extent that the amount of the excess referred to in that paragraph arises as a result of the recipient taking up a prompt payment discount offered by the supplier if the terms of the prompt payment discount offer are clearly stated on the face of the tax invoice. Did you just get VAT registered and you need someone to configure your accounting system for VAT? Leave a message Subscribe now: