Millions of South Africans have received notifications regarding the automated assessment of their tax returns. An expert emphasizes that understanding the implications of this new system is key to its effective use.
Millions of South Africans have received notifications regarding the automated assessment of their tax returns. An expert emphasizes that understanding the implications of this new system is key to its effective use.
In July, the South African Revenue Service (SARS) notified millions of citizens that their tax returns had been prepared automatically. For many, this has been a relief compared to the long wait times, queues, and complex paperwork associated with filing taxes. However, many are questioning whether they can trust an assessment they did not prepare themselves.
SARS officially began sending out automated assessment notifications from July 1st to July 12th. As of July 2nd, automatic determinations had been made for nearly 1.9 million taxpayers, resulting in the issuance of estimated 8 billion early payments. This new mechanism applies not only to employees but also to temporary taxpayers who meet specific criteria, marking a significant change in South Africa's tax system, according to Jenny Wilson-Jenkins, an employee of Shepstone & Wylie Attorneys.
Explaining the essence, Wilson-Jenkins notes that the automated assessment is a SARS initiative to compile an income tax return based on data collected from various third-party institutions. These institutions include employers, banks, medical scheme administrators, pension funds, and other approved data providers. Once SARS confirms the completeness and reliability of the received information, it prepares an assessment for the taxpayer, eliminating the need for manual form completion via eFiling.
It is important to understand that receiving an automated assessment does not relieve the taxpayer of their tax obligations and is not based on assumptions. Instead, it is a thorough data matching procedure where SARS forms the tax position based on reports from these third parties. Auto-assessment is only applicable to certain categories of taxpayers; if the data in eFiling is incomplete or if income is not documented by a third-party institution (such as freelance or rental income), the automated assessment will not be applied.
Those who did not receive a notification before July 12th are required to file their tax returns manually: non-resident taxpayers must do so between July 13th and October 23rd, while temporary taxpayers and trusts have until January 22, 2027.
A critical question arises: should one simply accept the automated assessment or take time to study it in detail? According to Wilson-Jenkins, the answer depends on the taxpayer's level of confidence in the completeness of the data held by SARS.
If the sole income for the year came from salary, and there are no additional deductions beyond those reflected, one might consider accepting the automated assessment as correct. Nevertheless, agreement with the assessment does not absolve liability. The ultimate responsibility for the accuracy of the tax return lies with the taxpayer under the Tax Administration Act. Failure to check or correct errors in the automated assessment can lead to future penalties and interest.
To ensure due diligence, it is recommended that every recipient of an automated assessment log into the SARS eFiling system or use the MobiApp to review the assessment itself and the underlying data before making a decision.
When conducting a review, several points should be noted. It is necessary to check for any unaccounted income, such as freelance earnings or rental income, which SARS may have missed, and in such a case, it should be declared manually.
Attention should also be paid to potentially unrecorded deductions, such as contributions to pension annuities or additional medical expenses. It is crucial to verify the accuracy of data regarding medical scheme contributions and dependent information, as this directly affects the medical tax credit. Furthermore, it is necessary to ensure the correctness of bank details for timely refunds, especially if the account has recently changed.
If the amount payable or refundable seems unexpected—whether abnormally high or low—it is extremely important to investigate the details further. Caution should also be exercised regarding fraud, as scammers often exploit the automated assessment period. It should be remembered that SARS will never request confidential information through unsolicited messages.
Although the automated assessment system provides significant convenience and promises quick refunds to many South African taxpayers, Wilson-Jenkins emphasizes that it does not replace the need for careful verification and due diligence. The shift to digital convenience should not become a reason to neglect one's obligations. Taking a few minutes to cross-reference figures with personal records can prevent future problems. The choice remains with the taxpayer, and with them, the responsibility for their tax affairs.
The 2026 tax season has begun, causing a wave of financial anxiety among millions of South Africans. Many taxpayers receive notifications from SARS via SMS or email that can be confusing.
Between July 1 and July 12, SARS issued automated assessments. Although the system is designed to simplify the filing process, it often leads to confusion. Some recipients see a small amount in their account after the automated assessment but doubt whether they are entitled to a larger sum. Others face notices of debt to SARS, which causes bewilderment. A third group receives messages stating that their cases are too complex for automated assessment and are forced to file manually through eFiling.
A locally developed platform, TaxClaw.AI, has emerged to bring clarity. This platform allows taxpayers to independently verify SARS's automated assessments before they become legally binding. The platform was launched three weeks ago and is headed by technology experts Ben Chaud, Meraj Chaya, and Marius Higgs, a registered tax specialist with fifteen years of industry experience.
Ben Chaud explained that TaxClaw was not initially intended for the general public: 'It started as a niche tool that we used internally for stress-testing internal filing data,' he said. However, seeing the large number of ordinary South Africans questioning the automated assessments, the team decided to make this technology accessible and provide free AI analysis to everyone.
The distinguishing feature of TaxClaw.AI is its architecture. It is not a standard language model connected to ChatGPT or Claude, but a custom-built machine learning model. It was trained on thousands of anonymized tax returns and complex tax simulations. The model's results are then rigorously checked by a specialized arithmetic engine to ensure compliance.
The practical application of this technology has proven to be highly significant. According to TaxClaw data, in the current tax season, one taxpayer received an automated assessment calculating a refund of 4325 rand. After running their data through TaxClaw AI, the system showed that they were actually entitled to a refund of 13525 rand. The SARS automated system, relying solely on third-party data, was unaware of the taxpayer's right to a home office deduction or the substantial charitable donations they made during the year. The tool identified these missed elements, pointing to an underclaimed refund of 9200 rand.
TaxClaw.AI operates on a principle of strict confidentiality, as no personal information is required to generate a report. Users do not need to provide a name, ID number, or phone number. The AI analysis is completely free, and the company only monetizes its services if the user explicitly chooses for TaxClaw's registered specialists to handle their final tax submission. The tax window closes in October, giving taxpayers time to use TaxClaw AI to increase their tax refund or potentially reduce the amount they owe to SARS.
Six million taxpayers in South Africa benefit from the convenience of automated assessment during tax season, but Sanjit Hannuman raises concerns about whether they are exposing themselves to the risk of costly errors.
During the first two weeks of the current tax period, SARS automatically assessed 1.9 million taxpayers, issuing approximately 8 billion early payments. These funds often reach bank accounts within 72 hours, eliminating queues, form filling, and stress for millions of employees for whom tax season concluded with a single SMS.
Automated assessment is a process where SARS independently generates a tax return using data received from employers, medical insurers, pension funds, and the taxpayer's bank. If a taxpayer was selected for such an assessment, they received a notification via SMS or email between July 1 and 12 regarding whether they were due a refund or owed SARS money. Provided the data is correct, no further action is required from them, and the refund is processed automatically.
The new Commissioner, Dr. Johnston Makubu, announced several improvements beneficial to taxpayers. The deadline to appeal or amend an automated assessment has been extended to October 23, 2026, aligning with the general filing deadline, provided the assessment was issued before August 27. Previously, taxpayers had a much tighter window for such actions.
Furthermore, for the first time, automated assessment has been expanded to certain temporary categories of taxpayers with more complex financial operations, such as rental or investment income, following a trial period that began in 2025. The addition of a simplified declaration, a dropdown list of medical schemes to reduce errors, and the ability to view the Assessment Notice and upload documents via WhatsApp indicates modernization by the tax authority.
Despite the convenience, there is a significant drawback: automated assessment relies solely on information provided by third parties to SARS, and SARS does not have a complete picture of an individual's financial situation. Last year, 99.6% of taxpayers who underwent automated assessment accepted it without changes, which, according to the author, is more a sign of blind faith than accuracy.
South Africans tend to assume that receiving a figure from SARS means it is flawless, yet the legal responsibility for the correctness of the assessment lies with the taxpayer, not with SARS, the employer, or the medical insurer. SARS does not see medical expenses paid from personal funds, nor does it account for a home office under a qualified work arrangement, donations to registered charities, accounts to confirm travel expenses, or contributions to pension annuities made directly, rather than through a payslip.
Tax Director at Hobbs Sinclair, Daniel Luwes, warned that the absence of these deductions could lead taxpayers to overpay taxes or lose legitimate reimbursements. Of particular danger is the carry-over of pension annuity contributions exceeding the annual limit from the previous year; if this carried-over amount is incorrectly linked to the current assessment, the deduction will simply disappear without any warning.
More alarming are instances where a Durban chartered accountant discovered six errors in automated assessments during the first week of the season, including unrecorded medical contributions and pension annuities. There were also reports of cases where taxpayers who voluntarily paid provisional tax received a full refund of their payment, even though they still owed money. Additionally, issues arose with tax fund directives, causing lump-sum payments from pension funds to be erroneously shown as taxable in automated assessments, creating false tax debts for pensioners.
If a taxpayer accepts an automated assessment that omits income—such as rent from a grandmother's apartment or freelance income—they are making a false declaration. In the event of a subsequent audit by SARS, whose data matching capabilities are constantly growing, they may face penalties up to 200% of the tax amount plus interest. A refund received within 72 hours can turn into a very expensive debt.
In conclusion, the author advises against rejecting the technology but rather verifying it: log into eFiling or MobiApp and cross-check every figure against IRP5 certificates, medical insurance, and pension fund statements. You must ask yourself two questions: is there income that SARS does not see, and are there deductions that SARS is unaware of? If the answer is yes, you should submit a corrected return by October 23, 2026. If no automated assessment was performed at all, the submission must be done independently, as the filing window opened on July 13. For complex financial situations, consulting a professional is recommended, as the cost of consultation is almost always lower than the cost of an error.
Taxpayers who received an automatic assessment from SARS this month have the option to submit a corrected declaration if inaccuracies or omissions are found. One of the most frequently overlooked aspects is the accounting of contributions made months or even years before the current assessment was generated.
In this reporting period, SARS has already automatically assessed over 1.9 million taxpayers and paid out approximately 8 billion rand in refunds within 72 hours, with the total number of assessments expected to exceed six million. This high speed is due to system improvements this year, as well as timely and accurate data reception from employers, medical aid schemes, and pension funds.
The most common discrepancies arise when accounting for contributions to pension annuities, especially if the contribution was made through a provider or in a year that does not match the current assessment period. Although SARS is accelerating the refund process, this increases the requirement for what the taxpayer considers accounted for and verified by the system.
Contributions to pension annuities can be deducted up to 27.5% of the taxpayer's income or taxable income according to Section 11F of the Income Tax Act. From March 1, 2026 (for the 2026/2027 tax year), the maximum annual monetary limit for pension fund deductions was increased from 350,000 rand to 430,000 rand. Contributions exceeding this limit are automatically carried over to the next tax year and must appear on the assessment notification, ITA34.
The problem is that this amount depends on the correct linkage of the current assessment with historical contributions. When this link is broken, the deduction is lost, and the assessment itself rarely shows an explicit sign that something is missing. Most people treat their pension annuity as a one-time setup that they no longer check. The assessment notification is not designed to automatically detect missing amounts; the taxpayer or a trusted consultant must check for discrepancies.
Individuals who have changed jobs, switched pension providers, or made contributions outside of standard payroll deductions need to carefully review their assessment and ensure that past year's excess contributions are included. If they are missing or look unfamiliar, it is worth raising this issue before accepting the assessment or before the acceptance deadline expires.
A corrected declaration can be submitted via eFiling until October 23, 2026, even after the assessment has been accepted. Checking your own figures is the same discipline that should be applied to any document related to your name and money. Other common gaps in automatic assessments include home office expenses, actual travel claims based on a logbook, and rental or freelance income that the SARS system is not configured to track through third-party data. It is recommended to consider July as an annual review of your tax affairs. A consultant notes that many clients have old contributions that never made it into the assessment, and they were unaware of it; the sooner this is discovered, the less time and money is required for correction.
