SARS coming after South African taxpayers

SARS has been ramping up its efforts to crack down on non-compliance, and experts warn that taxpayers should be careful to avoid certain mistakes to remain in the taxman’s good books.

The National Treasury is also helping to push this effort to stop noncompliance. In the 2025/2026 Budget, SARS received a R3.5 billion funding boost.

It was also given an additional R4 billion over the medium term to enhance tax compliance and efficiency. The Treasury noted that over the past five years, SARS has made significant progress in rebuilding and modernising its systems.

It has shifted to online services and automated many processes to improve service, detect fraud, and enhance compliance.

In 2025/26, SARS will address the tax gap to improve revenue collection. This will be done by leveraging artificial intelligence and data science to improve taxpayer compliance and trade facilitation.

These efforts mean that ensuring your tax affairs are in order is more important than ever.

Rehnu Vallabh, senior tax consultant at Tax Consulting South Africa, told Daily Investor that individuals should start getting ready as tax season quickly approaches.

“The 2025 annual filing season is expected to commence in July 2025, with SARS publishing the final dates in due course. Early preparation remains key to avoiding unnecessary stress and ensuring compliance.”

According to Vallabh, the following documents are essential for tax filing:

• IRP5/IT3(a): Issued by employers or financial institutions, for example, for lump sum payments.
• Medical Aid Tax Certificates: Provided by your medical scheme.
• Retirement Annuity IT3(f): Reflecting contributions made during the tax year.
• IT3(b) & IT3(c): Interest and investment income certificates from financial institutions.
• IT3(s): For tax-free savings contributions.
• Section 18A Certificates: For qualifying donations to PBOs.
• Travel Logbook: Record of business and private kilometres, supported by vehicle details.
• Rental Income Schedule: Include supporting documents for expenses and income received.
• Foreign Employment Income Schedule: Include passport copies and a breakdown of travel days.
• Financial Statements: These are required for individuals trading as sole proprietors.

“By compiling documentation early, you position yourself to file promptly and respond quickly to any SARS queries or verification requests.”

Mistakes to avoid

Vallabh explained several common mistakes South Africans should avoid during this tax season. This includes missing deadlines, which can result in administrative penalties. So, it’s crucial to file within the published deadlines.

Submitting incorrect information is another common error. “Ensure that all information on tax certificates is accurate before filing. Amending incorrect certificates can take time and delay your return.”

Overstating deductions or underreporting income is a serious offence that can lead to penalties or even prosecution, while incorrectly answering preliminary questions on SARS eFiling may affect the structure of the return.

Many individuals also make the mistake of only reporting their IRP5 income and omitting additional income sources. “All sources of income – including rental, freelance, foreign, or investment income – must be declared.”

Furthermore, taxpayers should not ignore SARS auto-assessments. Vallabh emphasised that even if you receive an auto-assessment, you must review and confirm its accuracy. Do not assume that it is correct by default.

Finally, many individuals make the common error of failing to keep adequate supporting documentation, which can lead to complications during verification.

“Ensure you retain and organise all necessary supporting documentation. SARS may request verification within short turnaround times – being audit-ready is essential.”

Vallabh warned that SARS is increasingly focused on improving compliance and has adopted a stricter approach to enforcement. South Africans with outstanding returns should take proactive steps to regularise their affairs.

This may include engaging with a tax practitioner to submit outstanding returns, arrange payment plans, and address penalties or disputes. “The earlier you engage, the more options you may have available to resolve non-compliance.”

Vallabh stressed that South Africans should do three things going into this year’s tax season: start early, be proactive, and stay compliant.

Preparing for the 2025 tax season in advance will reduce last-minute stress and ensure full SARS compliance. “Keep your contact details up to date to avoid missing important correspondence.”

“Before submitting any tax return, also verify that your banking details are correctly registered on your SARS profile to avoid payment delays.”