South Africans can pay less tax

By making the most out of 2025’s filing season, South Africans can legally reduce their tax burden, maximise refunds, and combat tax debt. 

The 2025/26 Budget saw SARS receive an injection of R3.5 billion. This, paired with the launch of Project AmaBillions, means the taxman has entered its most aggressive enforcement phase in years.

Now, SARS is quickly becoming one of the world’s most sophisticated, assertive, and unrelenting revenue authorities.

“Welcome to the new high-stakes era of tax compliance, which marks the end of the era of any perceived leniency,” said André Daniels, head of tax controversy and dispute resolution at Tax Consulting SA. “It is now the time of relentless enforcement.”

South Africa’s budget is strained. Only 7.4 million (12%) of its 64 million population pay personal income tax, while 28 million (44%) rely on social grants.

Without its initially proposed VAT hike, the National Treasury faces a R75 billion budget deficit. Daniels said this means that SARS is under more pressure than ever to collect taxes.

“The days of informal engagement are over. Today, SARS is functioning as a well-resourced enforcement agency, driven by targets and backed by increasingly automated systems that flag non-compliance in real-time,” he said.

Latita Africa’s Head of Global Strategy, Roxanna Naidoo, said she has already seen an increasing number of clients receiving final letters of demand, verification requests or document follow-ups. 

However, while the taxman may be more intimidating than ever, Naidoo explained that South Africans shouldn’t simply pay their taxes as quickly as possible.

There are a number of tax mechanisms that taxpayers can, and should, use for their personal benefit. Doing so can reduce their tax burden, maximise refunds, and prevent tax debt.

“It’s true that SARS is increasing scrutiny and ramping up tax collection measures,” Naidoo said. “But don’t panic.”

“Tax season is an annual opportunity to assess your finances – a tool for getting your tax affairs in order. Go have a look at what you owe SARS; you may be surprised that SARS actually owes you money.”

How to benefit this tax season

Firstly, Naidoo advised South Africans to update their details on SARS’ eFiling system to avoid penalties. Taxpayers’ email address, phone and banking details must be accurate, so SARS can communicate with them. 

This will also enable access to the auto-assessment feature and the new express filing tool, a pre-filled tax return based on third-party data, including employers, banks and medical aids.  

“Don’t simply accept your auto-assessment without verifying it,” Naidoo stressed. SARS might not 100% accurately capture tax complexities, such as rental income, side-hustles and other sources of income or expenditure. 

Even where discrepancies are due to missing third-party data, taxpayers are liable and may face penalties later. 

“Therefore, check everything carefully. If you’re unhappy with the auto-assessment, click on ‘request amendment’ and submit the corrections via eFiling,” she said.

Importantly, tax season isn’t only a time for SARS to benefit. “Whether you’re an individual or a corporate, there are ways to reduce your tax liability and maximise the amount you get back,” Naidoo added. 

South African tax residents must declare every income stream, even those from cryptocurrency or expat earnings already taxed overseas. 

However, after declaring all their income, taxpayers can apply for tax deductions, exemptions, and credits. 

Naidoo recommended claiming for medical expenses, retirement annuity contributions, charitable donations, home office and travel expenses, tax-free savings accounts and capital gains tax.

It is also crucial to retain all relevant documentation, including receipts, statements, and records of expenses, exemptions, and tax credits 

“It doesn’t matter how and where you file these, as long as you keep them for five years,” Naidoo said. “SARS often requests back-dated documentation, so make sure you have the paperwork to prove your filing was compliant.”

In cases where a taxpayer owes SARS money, she warned that they shouldn’t overextend themselves to settle it. 

“Taxpayers have legal recourse to avoid sinking further into debt,” she said. For example, taxpayers can negotiate to reduce the amount owed or defer payments to ease cash flow. 

If SARS’ assessment is incorrect, taxpayers can submit a suspension of payment to stop them from attaching or freezing their bank account while challenging it. And, if all fails, there’s mediation to settle a dispute cost-effectively.

Ideally, Naidoo said, taxpayers should take proactive, legal steps before SARS comes knocking. “If you’re smart about it, you can still turn this tax season from a compliance burden into a financial opportunity.”