When your phone or email beeps, you are hoping to hear from loved ones, not the tax man! However, SARS does diligently send out a wealth of notices, requests, and letters related to your tax affairs throughout the year. These range from simple confirmations of receipt to important notifications about the status of your tax. While it can be tempting to ignore them, it is important to stay on top of them and respond timeously to requests to make sure they don’t have knock-on effects on the tax you owe.
What are Income Tax Notices?
Speaking purely technically, ‘Income Tax Notices’ is the term the Government uses to cover the notices, amendments, and updates it publishes related to income tax matters in the Government Gazette. In South Africa, we have the existing framework of our taxation-related acts, and then Tax Notices are used to update, refine, and clarify those policies. Income Tax Notices specifically deal with updates and adjustments to the Income Tax Act of 1962.
However, the term ‘income tax notices’ is often used by laypeople to refer to the various communications they receive from SARS about their specific income tax returns. This includes Notices of Assessment, requests for supporting documents, and other communications from SARS.
How to Deal with Income Tax Notices?
The best way to deal with any communication from SARS, including income tax notices, is to open and read them and understand why they have been issued. Hiding from them could drop you in hot water! In many cases, there is absolutely nothing further needed from you and no bad news at all, and the notice will be a system-generated one informing you of amounts due, reference numbers to use, and other administrative issues. For example, the Notice of Assessment is generated from your submitted tax return. Typically, it informs you that the amount of income tax due which you submitted has been accepted, the amount due to be paid, and how to pay it.
However, some income tax notices will need more from you. The Notice of Assessment, for example, could also be used to tell you that SARS disagrees with the amount you have stated. Or it may be generated from a SARS auto-assessment, where you will need to log in and meticulously check what they have auto-populated for you is correct. You might also receive a notice from SARS requesting further supporting documents, or informing you that you have been selected for verification or audit processes. They may also be requesting corrections to a submitted return.
In most circumstances, you have 21 business days to respond to any request from SARS requiring your input, or roughly a calendar month. It is only when you fail to action their request by that deadline that further action will be taken. And, as we have explored, these are often very routine checks and verifications, and nothing to worry about. Even in cases where there is a potential dispute, taking action, uploading your proofs, and, if necessary, filing an official dispute with SARS will do what is needed to resolve the issue, whereas ignoring them will only exacerbate it.
How do I get my SARS Income Tax Letter?
The idea of ‘income tax letters’ is a vague and rather inaccurate one. There is no single SARS income tax letter you might receive. When these are used in day-to-day conversation, it typically means the person either wants proof you are tax registered (officially an IT150 form) or what used to be referred to as a ‘tax clearance certificate’, which proves to third parties that your tax affairs with SARS are compliant and in order.
Luckily, you can request both of these digitally via eFiling now. Your IT150 form is typically under ‘SARS Correspondence’, and can always be re-requested from them if you need to. You can also request this via their mobile app or the *134*7277# USSD code on a cellphone. The new Tax Compliance Status system replaced the older tax clearance certificate, offering a better, near real-time idea of your tax affairs. You will now activate this on your profile, and generate a PIN that can be sent to interested parties to confirm it.
What is an ITA34 Notice from SARS?
An ITA34 Notice from SARS is your Notice of Assessment. It is a summary of the information on your tax return- income, expenses, deductions, rebates, PAYE, and tax already paid- for the year related to the income tax form. It also provides you with banking and payment details, including the reference number you should use on all payments related to that form or tax period.
How Do I Know I Owe SARS?
When you submit any tax return, whether income tax or something like provisional tax or VAT, to SARS, you get your Notice of Assessment from them. This includes a summary of what has been paid towards the assed sum, outstanding balances, and how to pay them. However, this will always be centered on that one return, and may not be an accurate reflection of your whole account. You can also request a statement of account on eFiling, by heading to the ‘SARS Correspondence’ tab and generating it there. This will give you an accurate overall picture of everything you owe to SARS, either generally or per tax type.
Income tax notices may seem like another irritation in a world full of messages and prompts, but they carry important information about your account and the status of your income tax and refunds due, so they are worth paying attention to.
