SARS owes you money, and you have an income tax refund incoming! Don’t get too caught up in spending that cash in your mind just yet, however, as income tax refunds have been delayed in the past, and there have been some serious issues with delays in the last few years. However, there is some good news- in many cases, these delays are caused by issues you can proactively head off to ensure you get your refund as timeously as possible. Today, we will be looking at this issue in more depth and how to give your income tax refund the best possible chance of being processed quickly.
Why Your Tax Refund Might Be Delayed
While sometimes the delay in receiving a refund is on the SARS side, many things can delay the processing of your refund on your side, which you can control. This includes:
- Having the wrong bank account details linked to your name on the system
- Incomplete documentation and missing supporting documents (like IRP5 certificates)
- Being selected for audit or verification- the process will need to be completed
- Having outstanding amounts due in other tax types, like VAT, where the refund will be rolled over to pay for that owed amount instead of issued to you
SARS may also be in the process of verifying your submitted tax return against third-party data they have on their system for you. They do this to ensure you have been legitimate and accurate in what you have claimed. If discrepancies or anomalies are detected, additional time may be required for thorough investigations.
SARS may also experience delays due to a high volume of tax returns during peak filing periods. The influx of submissions can strain their resources, extending processing times. Additionally, changes in tax regulations or system updates may introduce complexities, requiring adjustments and validations that contribute to delays.
Do remember that SARS gives an average timeline of 21 business days to process refunds. This is roughly a full calendar month. Only after you pass that deadline should you enquire about the status of your refund.
How Long Does SARS Take to Pay Out VAT Refunds?
VAT refunds are slightly different from income tax refunds. Most VAT-registered entities file on a two-month cycle. You will be due for a VAT refund when the VAT you paid, or input VAT, is higher than the VAT you received from sales, or the output VAT. They are a very natural part of the overall flow of VAT payments in South Africa.
For businesses that are VAT registered, SARS offers the same blanket 21 working days promise as they do for income tax refunds and other payments. This equates to roughly a full calendar month. However, there can be delays caused by the same administrative hiccups we looked at for income tax, or simply from the volume of returns being processed at the time you submit. This means due VAT refunds at times like the close of income tax season, when there is a high volume of users in the system, may be slower than at other times. It is also common for the first VAT refund you receive to be slower to process than subsequent ones, as SARS will be very diligent about checking your banking details. Ensuring those are correctly reflected on their system is a great way to streamline the process.
How Do I Track My South African Tax Refund?
You will know you are due an income tax refund the moment you file the return. If you have paid more tax (through channels like provisional tax and PAYE) then you need to, you have a refund due. Once the return is filed, this will automatically kickstart the refund process.
Unlike some other countries (notably India), there is no kind of ‘live tracking’ available for your tax refund status. You can log in to your eFiling account to see if you have received any communication on the matter (check the ‘SARS Correspondence’) tab, or to initiate a query with them. Here you can also request a Statement of Account, which will show that there is an amount due to you.
However, there will be no ongoing information about the status of the refund. If it is taking longer than the stated 21 business day period, your best bet will be to call the SARS helpline and see if they can give you further information on the delay. Remember that SARS may not pay out a due income tax refund if you owe money on other tax types (like VAT).
How Do I Know if SARS Owes Me Money on eFiling?
You will know that SARS owes you money on eFIling by the Notice of Assessment you receive regarding a specific return. You can also request a Statement of Account for any (or all) tax types you are registered for, which will show the amount you are due as a refund.
Waiting for a tax refund can be annoying, as it is money you are due, but delays happen, and exercising patience will always be the best way to go about it.
