The South African Revenue Service (SARS) has paid out billions of rand in tax refunds to taxpayers, but some of these amounts may be received by recipients with a delay.
IOL previously reported that the automatic assessment period by the Tax Service was coming to an end. The service now allows the submission of income tax returns for both temporary and non-temporary taxpayers.
The automatic assessment ran from July 1 to July 12, 2026, and allowed taxpayers with simpler tax affairs to check calculations prepared by SARS using data obtained from employers, banks, medical schemes, pension funds, and other third-party data providers.
Starting from July 13, 2026, the tax return submission season moved to the next phase, opening up the possibility for submissions by temporary and non-temporary taxpayers. Non-temporary taxpayers have until October 23, 2026, to file, while temporary taxpayers must submit their documents before January 22, 202.
Although some taxpayers who underwent automatic assessment have already received their reimbursements, SARS has provided a list of factors that may lead to payment delays.
A tax refund may be delayed for several reasons when submitting a tax return:
The automatic assessment period has ended, and taxpayers who still need to file income tax returns can now use the SARS MobiApp to complete this process.
The South African Revenue Service (SARS) previously announced that the automatic assessment period would run from July 1 to July 12, 2026. Taxpayers selected for automatic assessment received notifications to verify pre-filled tax information via the eFiling system or through the SARS MobiApp.
The revenue service confirmed that during the first days of the filing season, approximately 1.9 million taxpayers underwent automatic assessment, with about 8 billion rand in tax refunds paid within 72 hours.
Attention now shifts to taxpayers who were not selected for automatic assessment, or those who wish to amend their assessment. These individuals must file their income tax returns between July 13 and October 23, 2026. They can use either SARS eFiling or SARS MobiApp to complete their returns.
To get started, you must be a registered eFiling user with a valid login and password. The user should open the SARS Mobi app icon on the device, select the 'Login' option, enter credentials, and press 'Login' again. After logging in, you can proceed to create and fill out the tax return by pressing 'Tax Returns', which will open the Form Creation Wizard.
When working on the return, it is important to pay attention to color coding: red indicates incompleteness and the need for information entry, while blue signifies that all required information has been entered. The process involves completing standard questions to create the return, entering all necessary taxpayer data, and updating bank details.
When filling out the employee income tax certificate (IRP5) section, you must match the data with the certificate provided by the employer. If the section is marked in red, you should click 'Refresh' to update the information. You also need to review the pre-filled medical aid information in the deductions section. After this, the user clicks 'Tax Calc' to save and calculate the return, then reviews the result to determine whether they owe SARS money or are due a refund.
The user should only click 'Submit' if they are confident in the accuracy of all data. If they wish to return to work later, simply click 'Save'. After successful submission, you can navigate to the 'View Assessment' section to see the results, and download the full tax assessment in PDF format via 'View ITA34 PDF'. The result will be a negative number if a refund is due from SARS, and a positive number if the taxpayer owes SARS.
In tax disputes, it is no longer sufficient to merely assert that an error was unintentional. Victory is achieved by providing evidence of what happened, why it happened, and whether the SARS law was applied correctly.
The most expensive part of a SARS assessment is not always the additional tax; often, it is the penalty. Many taxpayers are surprised by this, assuming that if the error was not intentional, the penalty should be waived. They might cite the accountant who prepared the return, a consultant, or claim that no one tried to mislead SARS—which sounds convincing in casual conversation but is insufficient in a dispute with SARS.
South Africa's penalties system for non-submission has shifted the battleground from intent to evidence. The simple dishonest behavior of the taxpayer is no longer the deciding factor. Now, it is necessary to establish whether there was a misunderstanding, whether SARS suffered damage, which category of behavior SARS selected, how the deficit was calculated, and whether the taxpayer can prove that the penalty is legally incorrect or factually excessive.
Misunderstanding is not limited to fraud. It can arise from an omission in the return, an incorrect declaration, failure to submit a return, or an improper avoidance scheme. SARS's guide on penalties for non-submission views damage to SARS or the treasury as the central trigger, after which the deficit is quantitatively determined by comparing the correct tax position with the position reflected or assumed before the misunderstanding was identified.
The percentage of the penalty is determined by the category of behavior. The legislative table distinguishes between material misunderstanding, lack of reasonable care when completing the return, lack of reasonable basis for the adopted tax position, improper avoidance schemes, gross negligence, and willful tax evasion. The more culpable the behavior, the harsher the penalty. The SARS guide describes this system as a progressive sanctions structure, providing for higher penalties for more serious conduct and mitigation for voluntary disclosure.
Taxpayers often misjudge risks by defending against accusations of evasion, whereas SARS may not need to prove evasion at all. A taxpayer might avoid a charge of willful misconduct but still face a penalty if SARS determines that reasonable care was not exercised, the tax position lacked a reasonable basis, or the misunderstanding was material.
The law has also changed such that vague explanations have become riskier. The Finance Act Amendment Act of 2026 introduced changes to Section 222 of the Tax Administration Act. The amended wording states that if a misunderstanding includes behavior listed in the penalties for non-submission table in Section 223, the taxpayer must pay the penalty for non-submission determined in accordance with Section 222(2). The previous wording, which excluded misunderstandings arising from honest unintentional errors, was removed from Section 222, and Section 223(3) was amended to directly regulate the cancellation of a penalty imposed for material misunderstanding if the misunderstanding results from an honest unintentional error.
In practice, this does not mean SARS is always right. It means that taxpayers must be much more disciplined in fighting assessments of penalties. The phrase 'honest unintentional error' remains important, but it is not a magic password. The Constitutional Court's ruling in the case of The Thistle Trust v Commissioner SARS placed this phrase directly into the landscape of tax disputes. SARS registers this case as relating to penalties for non-submission and honest unintentional error under the Tax Administration Act. The lesson for taxpayers is not that every honest mistake avoids a penalty. The lesson is that the nature of the error must be proven.
This proof usually needs to exist before the dispute begins. A taxpayer wishing to challenge a penalty for non-submission must be able to provide the return, working papers, tax calculation, source documents, consultations obtained before filing, the sequence of the verified process, and a chronology of what was communicated to SARS and when. If a company or trust is involved, the management file must also show who approved the tax position and whether the relevant directors or trustees understood the commercial arrangement that led to the tax accounting.
A short letter stating 'there was no intention to evade tax' will rarely be sufficient. SARS has the right to ask more complex questions: Who prepared the return? What information did this person have? Was the issue reviewed? Was there a tax opinion? Was full disclosure provided to SARS? Was the taxpayer's position objectively debatable at the time? Did the taxpayer ignore an obvious risk? Was the error isolated, recurring, systemic, or commercially advantageous?
These questions are not academic; they resolve financial matters. For business owners, a penalty dispute should be viewed as a matter of financial risk, not just compliance with tax legislation. A penalty for non-submission can distort cash flow, affect bank covenants, complicate financial reporting, influence audit opinions, and subject directors or trustees to awkward governance questions. With a large assessment, the penalty can also change the settlement strategy. A taxpayer who cannot provide proper documentation may find that the penalty becomes the starting point of the entire dispute.
Procedure also matters. Current SARS guidance on disputes in eFiling indicates that when challenging penalties, interest, assessments, or administrative fines, taxpayers can submit a request for cancellation, a notice of objection, a notice of appeal, a request for justification, a request for late submission, or a request for payment suspension. These steps are not interchangeable. A request for cancellation is not the same as an objection. A request for justification is not a payment suspension. Payment suspension itself does not win the essence of the dispute.
The sequence must be managed carefully. Taxpayers must first understand what SARS assessed, which category of behavior was applied, how the deficit was calculated, and whether SARS provided adequate grounds. Only then can the advisor decide whether the correct response is a request for cancellation, objection, appeal, settlement, analysis of voluntary disclosure, payment suspension, or a combination of these steps.
There is also a broader political issue. SARS is under pressure to effectively collect revenue. Penalties are part of this enforcement architecture. They are intended to deter non-compliance, not just compensate the treasury for delayed payments. This is why penalty disputes are becoming more evidence-based and less lenient toward poor record-keeping.
However, the same system requires discipline from SARS. A penalty should not be imposed by formula or assumption. SARS must identify the misunderstanding, link it to statutory damage, apply the correct category of behavior, calculate the deficit correctly, and provide the taxpayer with a procedurally fair opportunity to challenge the decision. The taxpayer's mistake is assuming that fairness will be obvious. It will not be obvious if it is not documented. The new reality is harsh: in a penalty dispute, SARS memory is weak, intent is disputed, and retrospect is ignored. The case is won by evidence. Taxpayers who keep proper records, obtain pre-filing advice, disclose material facts, and document their rationale are in a much stronger position to challenge penalties. Those who reconstruct the file only after receiving an assessment are already at a disadvantage. The tax account may start with SARS, but the outcome often depends on the taxpayer's own documentation.
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