Here’s What You Need to Know

For many South Africans, tax season brings one big concern:

“What if SARS audits my tax return?”

The word “audit” can sound intimidating, but being selected for a SARS verification or audit doesn’t automatically mean you’ve done anything wrong.

Every year, SARS reviews thousands of tax returns to ensure taxpayers have declared their income correctly and claimed only the deductions they’re entitled to. Many of these reviews are selected automatically using sophisticated data-matching systems and risk analysis.

The good news? There are practical steps you can take to reduce the chances of your return being flagged.

Let’s look at some of the most common red flags that may trigger a SARS verification or audit.

1. Incomplete or Missing Information

One of the most common reasons for a tax return being flagged is incomplete or inconsistent information.

SARS receives information about taxpayers from a variety of third-party institutions before you even submit your return. These include:

• Employers
• Banks
• Medical aid schemes
• Retirement funds
• Investment companies
• Insurance providers

When you submit your return, SARS compares what you’ve declared against the information already on record.

If something is missing or doesn’t match, the system may automatically flag your return for further review.

Tip

Always review your pre-populated tax return carefully.

Although SARS pre-fills much of your information, errors can occur. Never assume everything is correct simply because it’s already there.

2. Significant Changes from Previous Years

Large changes in your financial information from one tax year to the next can attract attention.

For example:

• A substantial drop in income
• A sudden increase in deductible expenses
• A much larger refund than usual
• Significant changes in business expenses

Imagine you typically earn R250,000 per year but suddenly claim R60,000 in deductions without a clear reason. SARS may request additional information to understand the change.

This doesn’t necessarily mean you’ve done anything wrong, but you should be prepared to explain unusual fluctuations.

3. Claiming Deductions Without Supporting Documents

Many legitimate tax deductions require supporting evidence.

Examples include:

• Medical expenses
• Retirement annuity contributions
• Home office expenses
• Business travel
• Donations to approved organisations

If SARS selects your return for verification, you’ll need to provide documentation such as:

• Receipts
• Tax certificates
• Logbooks
• Invoices
• Donation certificates

Without proper records, legitimate claims can be disallowed.

Tip

Create a digital folder for each tax year and store all your supporting documents in one place.

SARS generally recommends that taxpayers retain supporting documentation for at least five years.

4. Unusually High Refund Claims

Everyone enjoys receiving a tax refund.

However, an unusually large refund compared with your income or previous tax returns may prompt SARS to review your return more closely.

A large refund isn’t automatically suspicious, but SARS may want to confirm that:

• Your deductions are valid.
• Your income has been declared correctly.
• Your tax credits have been calculated accurately.

Never exaggerate deductions simply to increase your refund.

Incorrect claims can result in additional tax assessments, penalties and interest, and in serious cases, further legal action.

5. Not Declaring All Your Income

One of the biggest mistakes taxpayers make is forgetting—or choosing not—to declare every source of income.

Remember, salary isn’t the only income SARS considers.

You may also need to declare income from:

• Freelance work
• Consulting
• Rental properties
• Investments
• Side businesses
• Foreign income

SARS uses advanced data matching and technology to compare your tax return with information received from financial institutions and other third parties.

Income earned through online platforms, rental marketplaces and investment accounts is becoming increasingly visible to SARS.

The safest approach is simple:

Declare all taxable income.

6. Using the Wrong Taxpayer Category

Many people with side businesses or freelance income continue filing as ordinary salaried employees.

Depending on your circumstances, you may actually qualify as a provisional taxpayer.

Failing to register or submit provisional tax returns when required can create compliance issues and unexpected tax liabilities.

If you’re unsure which taxpayer category applies to you, it’s worth seeking professional advice before submitting your return.

Audit vs Verification – What’s the Difference?

Many taxpayers use these terms interchangeably, but they’re not exactly the same.

A verification usually involves SARS requesting documents to confirm the information you’ve submitted.

An audit is generally a more detailed examination of your tax affairs and may involve additional enquiries.

In both cases, being selected doesn’t automatically mean you’ve made a mistake.

It simply means SARS requires more information before finalising your assessment.

How to Reduce Your Chances of Being Flagged

While there’s no guaranteed way to avoid a verification or audit, good tax practices can significantly reduce your risk.

Here are a few simple habits to adopt:

• Check all pre-populated information carefully.
• Declare every source of taxable income.
• Only claim deductions you’re entitled to.
• Keep supporting documents organised.
• Retain your records for at least five years.
• Ensure you’re filing under the correct taxpayer category.
• Review your return thoroughly before submitting it.

Final Thoughts

Receiving a verification request or being selected for an audit doesn’t mean you’ve done something wrong.

What matters most is being prepared.

If your tax return is accurate, your income has been fully declared, and you have the necessary supporting documents, the process is usually straightforward.

At MMB Accounting, we help individuals and businesses prepare accurate tax returns, remain compliant with SARS requirements and confidently respond to verification requests when they arise.

This tax season, don’t focus on avoiding SARS.

Focus on submitting an honest, accurate return backed by good record-keeping.

That’s the best way to stay compliant—and enjoy greater peace of mind.

Need help – please get in touch

Call: +27 71 360 0018

WhatsApp: +27 82 858 3919

Email: mari@mmbaccounting.co.za