Saving grace for taxpayers in South Africa

Experts warned South Africans that assuming their tax affairs are in order can be a costly mistake, but fortunately, there is a way they can avoid getting in trouble with SARS.

This is the message from Tax Consulting SA’s Expatriate Tax Support Specialist, Rendani Makatu, and SARS Compliance Specialist, Alex Mahundla.

Makatu and Mahundla explained that, as 2026 begins, there is no better time for taxpayers to gain clarity on their exact standing with the South African Revenue Service (SARS).

“Many individuals assume their tax affairs are in perfect order, but as the saying goes, assumption is the mother of all mistakes. When it comes to SARS, it can be an expensive one.”

“Even taxpayers with the best intentions may be unaware that the system could reflect matters such as missed filings, outstanding penalties, or discrepancies between submitted returns and SARS records.”

The only way taxpayers can know for sure that their affairs are in order is through a Tax Health Check. According to Makatu and Mahundla, the most efficient way to do this is via a Tax Diagnostic Review.

This provides taxpayers with a thorough review of their SARS profile, identifies potential risks, reconciles records, and highlights areas requiring attention, giving taxpayers a clear picture of where they stand before any issues escalate.

“Much like medical test results that pinpoint areas needing attention, a Tax Diagnostic removes uncertainty and flags compliance areas the taxpayer may not even know exist.”

They said a Tax Diagnostic also serves as a form of SARS self-evaluation. “Reviewing your tax standing early in the year allows you to understand how SARS interprets your filings, what risks exist on your profile, and whether historical submissions match SARS’s internal records.”

The Tax Diagnostic process

A Tax Diagnostic is not only about identifying problems – it is about creating a clear plan of action for the year,” Makatu and Mahundla said. The process typically involves five components.

First, the taxpayer’s records with SARS are reconciled to ensure all returns, payments, and filings match exactly.

Their personal and contact information is verified to make sure SARS can reach them and that no notices or important correspondence are missed.

The process also identifies errors and potential risks. This could include administrative risks, such as incorrect personal details, missing documents, or misclassified expenses.

There could also be compliance risks, such as undeclared foreign income, discrepancies in previous filings, overlooked deductions, or late submissions.

The Tax Diagnostic process also involves developing a strategic action plan. This includes outlining next steps, deadlines, and interventions required.

“These actions should ideally be developed in consultation with, or left to, qualified tax specialists to ensure compliance and effectiveness,” Makatu and Mahundla recommended.

If necessary, the process involves engaging with SARS to correct errors, update records or request reprocessing before problems escalate. “The benefits of this process are immediate,” they said.

Potential issues are addressed before SARS escalates, and hidden inconsistencies, notices, or penalties are uncovered and resolved early.

With an accurate view of their profile, taxpayers can also plan tax submissions, investments, or business decisions with confidence.

“You act on accurate information, not assumptions. Therefore, you are being proactive, not exposing yourself to SARS.”

Taxpayers also get peace of mind, knowing exactly where they stand and that their affairs are in order, Makatu and Mahundla noted.

A path for expats and emigrants

While a Tax Diagnostic is valuable for all taxpayers, it is especially useful for expatriates and those planning to emigrate, Makatu and Mahundla explained.

The process also comes with recommended steps tailored to their situation, which is particularly important for:

• Individuals who have left South Africa: Ensuring tax compliance before departure and addressing any outstanding matters.
• Individuals planning to leave South Africa: Planning proactively to mitigate risks and prevent penalties while abroad.
• Individuals intending to cease South African tax residency or wind down their tax affairs: Mapping out the proper steps for ceasing your tax obligations in South Africa, ensuring that the exit or cessation is handled correctly and aligns with SARS requirements.

“By following these recommended steps, you can reduce unexpected exposure, prevent issues from escalating, and create a clear path forward – all without relying solely on SARS notifications.”

“This ensures you are fully prepared, whether you are living in South Africa or abroad. Ultimately, a Tax Diagnostic provides the opportunity to start the tax year on a solid footing, rather than reacting to problems later.”

Makatu and Mahundla stressed that conducting a Tax Diagnostic immediately after the holidays is a strategic, proactive step that ensures clarity, compliance, and peace of mind – rather than waiting for SARS to highlight issues.