October 5 2026 16:15
CENTURION, SOUTH AFRICA
This is a guest article by Margaret Smith, Tax Manager, Nexia SAB&T
Long before a taxpayer opens eFiling, SARS has usually already received most of the numbers that will appear on the return. Employers, banks, medical schemes, retirement funds, and investment platforms are legally required to report directly to SARS, and that data increasingly arrives before the taxpayer does anything at all. For Filing Season 2026, SARS expanded that pipeline further, auto-assessing more than 6 million taxpayers before the general filing period even opened, while also rolling out digital enhancements such as Lwazi — its AI assistant that helps taxpayers self-service filing queries — and the ability to submit supporting documents and receive assessment notices via WhatsApp. Understanding what SARS already has, and where the gaps still sit, matters more this year than in any previous filing season.
Where the Data Comes From
Under section 26 of the Tax Administration Act, No. 28 of 2011 (“TAA”), banks, medical schemes, retirement funds, insurers, employers, and other institutions must submit detailed third-party returns to SARS. The most familiar is the IRP5 or IT3(a) from an employer, but the list runs further: IT3(b) covers interest income, property rights income, and royalties; IT3(c) reports gains or losses on unit trusts, shares, and other financial instruments; IT3(d) covers section 18A donations; IT3(f) covers medical scheme, insurance, and retirement annuity contributions; IT3(s) covers tax-free savings accounts; and IT3(t) covers amounts vested in trust beneficiaries. SARS also receives foreign account information from more than 100 jurisdictions under the OECD’s Common Reporting Standard, so offshore accounts are visible too.
Auto-Assessment: Convenience with a Catch
SARS used this data to auto-assess more than 6 million taxpayers (including provisional taxpayers) between 1 and 12 July 2026, under section 95 of the TAA — the provision that empowers SARS to estimate where a return or supporting material is missing — without anyone filing a return.
Within the first day of the window alone, close to 2 million taxpayers had already been auto assessed, with roughly R8 billion in refunds paid out within about 72 hours of acceptance. If the figures look right, no action is required, but silence is treated as acceptance. The catch is what an auto-assessment cannot see: rental income, freelance or side-hustle earnings, foreign income not yet reported through information-sharing, and crypto-asset gains. None of that is automatically included, and none of it is optional to declare.
Under the Crypto-Asset Reporting Framework (CARF), effective 1 March 2026, South African crypto-asset service providers must report user transaction data to SARS from 2027 — but the onus to declare gains and losses on the ITR12 remains with the taxpayer.
You Can’t Just Edit the Wrong Number
A common misconception is that an incorrect figure on a pre-filled return can simply be typed over. It can’t. Where third-party data is wrong, such as an incorrect IRP5 figure or a medical aid certificate that doesn’t match actual contributions, SARS requires the originating institution to correct and resubmit the data itself; the taxpayer cannot override it directly on the ITR12. What taxpayers can add is income or deductions SARS never had in the first place. Confusing the two, or assuming a wrong figure will sort itself out, is one of the more common ways a straightforward return turns into a drawn-out correction process.
Why Discrepancies Matter More Now
For 2026, SARS introduced a pre-verification “declaration alert” questionnaire to flag mismatches between declared figures and SARS’s own third-party data before the assessment is finalised. Gaps are now easier to detect than ever, and understatement penalties under Chapter 16 of the TAA apply even where an error was bona fide.
Following amendments effective 1 April 2026, a bona fide error no longer keeps a matter outside the penalty regime; under section 223(3)(a) it only serves as a ground to remit a penalty for a substantial understatement. Penalties range from 10% for a substantial understatement to 25% where reasonable care was not taken, up to 200% for intentional evasion.
The more SARS already knows, the less room there is for a return that simply doesn’t add up.
The Practical Approach
The most useful habit ahead of any filing season is checking third-party certificates for accuracy before SARS acts on them; IRP5, medical aid, retirement fund, and investment certificates are all visible on eFiling and worth reviewing early. If an auto-assessment looks wrong, resolve it at the source: ask the employer, fund, or scheme to correct and resubmit, rather than trying to edit SARS’s own data. Separately, gather documentation for anything SARS wouldn’t automatically know about, such as rental income, side income, foreign accounts, or crypto disposals, and add it via a filed return rather than assuming a clean auto-assessment means a complete one. Take the declaration alert questionnaire seriously if one appears; it is designed to surface a mismatch before SARS’s system does. Corrections are due by 23 October 2026 for non-provisional taxpayers and 22 January 2027 for provisional taxpayers, and addressing a discrepancy before SARS flags it is far simpler than resolving it afterwards.
If you’ve received an auto-assessment you’re unsure about or need help reconciling third-party data against your own records before the filing deadline, we can help you review the figures, correct the return at the source where necessary, and manage the process with SARS. Contact:
Author Name: Margaret Smith
Contact Number: 012 682 8750
Email Address: margaret@nexia-sabt.co.za
Partner content for Nexia SAB&T
247@propertyflash.co.za
