When tax season arrives in South Africa, many people hope to receive a refund after submitting their returns to the South African Revenue Service (SARS). However, sometimes it can be confusing or frustrating when the refund does not arrive as quickly as expected. Understanding how the SARS refund process works can save you a lot of stress and time.
Key Takeaways
- Accurate Tax Returns Help Speed Up Refunds: Submitting a complete and correct tax return on time ensures SARS can process your refund quickly without unnecessary delays.
- Verification, Banking Details, and Outstanding Returns Can Delay Refunds: Common issues like audits, incorrect banking information, unpaid tax debts, or missing returns can cause SARS to hold back your refund.
- Proactive Management Is Key: Keeping your details updated, responding to SARS quickly, and regularly checking your refund status on eFiling or the MobiApp can help you avoid refund problems.
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What Is A Tax Refund?
A tax refund happens when SARS returns money to you after you have paid more tax than required. This usually occurs when either you or your employer overpays the amount of tax owed during the year. Once SARS finalises your tax return and finds that too much was paid, they issue a refund directly to your bank account. Many taxpayers are not even aware that they are eligible for a refund until the money is paid out, making it a welcome surprise.
However, you must be registered with SARS, pay taxes correctly, and submit your tax returns each year to qualify for a refund. If you are owed a refund but have any outstanding tax returns or unresolved issues with SARS, the refund will not be processed until everything is up to date. Staying compliant ensures that you receive any refund owed to you without unnecessary delays.
Common Reasons for Receiving a Refund
Several situations can lead to a tax refund:
- Overpayment of PAYE: If your employer deducted more tax than necessary, perhaps due to incorrect tax codes or changes in your income, you might be entitled to a refund.
- Tax Deductions and Credits: Claiming allowable deductions, such as medical expenses, retirement annuity contributions, or travel expenses for business purposes, can reduce your taxable income, potentially resulting in a refund.
- Employment Changes: If you were unemployed for part of the year or changed jobs, your overall income might be lower than anticipated, leading to overpaid taxes.
- Provisional Tax Payments: If you’re a provisional taxpayer and your estimated payments exceeded your actual tax liability, the difference could be refunded.
- Foreign Income and Double Taxation Agreements: South Africans working abroad might be eligible for refunds if they’ve overpaid taxes due to international income and applicable tax treaties.
Getting a tax refund often feels like a win, but to fully appreciate the process, you need to grasp What is SARS? (South African Revenue Service). Understanding the role SARS plays will help you make sense of deductions, refunds, and your rights as a taxpayer.
The Refund Process
Filing a Tax Return and Assessment
In South Africa, individuals must submit an annual income tax return to SARS, reporting their income, deductions, and other financial details. Once the return is filed, SARS assesses it to determine whether you owe tax or are due a refund. Filing season for non-provisional taxpayers typically runs from mid-July to late October, while provisional taxpayers have until late January the following year. Submitting an accurate return on time is the first step towards receiving any refund due.
Auto-Assessment Process and Its Implications
SARS introduced auto-assessments to simplify the filing process. Using data from employers, medical aids, and financial institutions, SARS can automatically generate tax assessments for some taxpayers. If you agree with the auto-assessment, no action is needed, and refunds are usually paid within 72 hours, assuming your banking details are correct and there are no outstanding issues. If you disagree, you must submit an amended return within 40 business days. Auto-assessment speeds up refunds but requires you to check all the information carefully.
Verification and Audit Procedures
SARS may select returns for verification or audit:
- Verification: SARS requests supporting documents to confirm information. This process usually concludes within 21 business days after receiving the documents.
- Audit: A more detailed examination of your financial records, typically finalised within 90 business days once all information is received.
If your return is under verification or audit, your refund will only be processed once these checks are complete. Delays often occur when taxpayers do not submit documents promptly.
Timeframes for Refund Processing
If no verification or audit is needed, SARS aims to pay refunds of more than R100 within 72 hours after assessing your return. However, refunds can be delayed if there are outstanding returns, incorrect banking details, or ongoing verifications. Keeping your details updated and responding quickly to SARS queries helps avoid unnecessary delays.
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What If SARS Has Not Paid My Refund?
There are times when a refund is not paid out straight away. If you are expecting a refund and it has not appeared in your bank account after more than a week, it is worth checking a few possible reasons for the delay.
Audit Or Verification
Your tax return could have been selected for audit or verification. If your return is under review, SARS will usually send a follow-up letter asking you to provide supporting documents.
This review simply means SARS wants to check that the information you submitted matches your original documents. There is no need to be concerned if your return was completed correctly and honestly. You will see a popup message called “Documents for Review” on your Income Tax Working Page on eFiling, where you must upload digital copies or scans of the required documents. Each document must be smaller than 5MB, and you cannot upload more than 20 documents in total.
Once SARS has completed the audit, they are given 21 business days to finalise the process and issue a Letter of Completion. After you receive the Letter, you can normally expect your refund within 7 business days.
Banking Details
Another common reason for delays is incorrect, outdated, or missing banking details. SARS usually informs taxpayers if there is a problem, but if you have not been contacted and your refund is overdue, you should check what banking details SARS has on file.
You can do this by logging into SARS eFiling and reviewing your registered details. Having the correct banking information on record is necessary for your refund to be paid.
Outstanding Tax Returns
If you have any outstanding tax returns, SARS will not release your refund until all returns have been submitted.
You can check for outstanding returns by clicking on the Returns tab on SARS eFiling, selecting SARS Correspondence, choosing Request Historic IT Notices, and then viewing a Statement of Account (also called an ITSA).
If you submit the missing returns, SARS can process your refund, unless there are penalties or other amounts owing that still need to be sorted out.
Unpaid Tax Balances
Another reason for a delayed refund could be that you owe SARS money. You can check whether you have an outstanding balance by requesting a Statement of Account on eFiling.
If you do owe SARS, they may deduct the amount you owe from your refund. However, it is not guaranteed — in many cases, SARS requires taxpayers to pay the outstanding balance first before they process the refund.
Tips for a Smooth Refund Experience
Receiving your tax refund promptly from the South African Revenue Service (SARS) requires careful attention to detail and proactive management of your tax affairs. By following these practical tips, you can help ensure a seamless refund process.
Keep Your Personal and Banking Details Updated
Ensure that your personal information, including your banking details, is current and accurate on SARS eFiling or the SARS MobiApp. Incorrect or outdated banking information can lead to delays in receiving your refund. If your banking details are selected for verification, the process can take up to 21 business days from the date all required supporting documents are received.
Respond Promptly to SARS Requests
If SARS selects your return for verification or audit, they will request supporting documents. Submit the requested information as soon as possible to avoid delays. Verifications are typically concluded within 21 business days, and audits within 90 business days, from the date all required documents are received.
Submit All Outstanding Tax Returns
Before a refund can be processed, SARS requires that all your tax returns are submitted. If you have any outstanding returns, your refund will not be paid until these are filed.
Monitor Your Refund Status
Regularly check the status of your refund on SARS eFiling or the SARS MobiApp. You can view the refund amount and payment date on the ‘Income Tax Statement of Account’ (ITSA).
Address Any Outstanding Debts
If you owe SARS money, they may offset your refund against your outstanding debt. Ensure that any debts are settled to receive your full refund.
Be Aware of the Refund Process Timeline
Once your return is assessed and no verification or audit is required, SARS aims to pay refunds within 72 hours. However, if your return is selected for verification or audit, the refund will be processed after these procedures are completed.
Conclusion
Receiving your tax refund from SARS can be straightforward if you stay organised and keep your tax affairs up to date. Understanding how the refund process works, knowing what can cause delays, and taking simple steps like checking your banking details and submitting all outstanding returns can make a big difference. If your refund is delayed, it is often due to audits, missing information, or unpaid debts, all of which can be resolved with quick action. By being proactive and regularly monitoring your eFiling profile, you can ensure a smoother and quicker refund experience. Always remember that staying compliant with SARS requirements is the best way to avoid refund delays and unnecessary stress.
Frequently Asked Questions
How long does SARS take to pay a refund?
SARS generally pays refunds within 72 hours after your tax return has been assessed, provided there are no issues requiring verification or audit. If your return is selected for further checks, the refund will only be processed after SARS completes its review and confirms everything is in order.
What should I do if my refund is delayed?
If your refund has not arrived within a reasonable time, you should first check whether your banking details are correct, if any tax returns are outstanding, or if your return has been selected for verification or audit. You can find all this information by logging into SARS eFiling or using the SARS MobiApp to view your tax account.
Can SARS use my refund to pay other debts?
Yes, SARS is allowed to use part or all of your refund to settle any outstanding tax debts or unpaid amounts you owe. In some cases, SARS may offset the amount automatically, or they might first ask you to settle any debt before issuing the refund balance.
How do I check my refund status with SARS?
You can monitor the progress of your refund easily by logging into SARS eFiling or using the SARS MobiApp. There you can request an Income Tax Statement of Account (ITSA), which will show whether a refund is due, the expected payment date, or any issues that might be causing a delay.
What happens if my banking details are wrong?
If your banking details on SARS systems are incorrect, outdated, or incomplete, SARS will not be able to process your refund. You must update your details through eFiling or, in some cases, visit a SARS branch for verification. Making sure your banking information is current helps avoid unnecessary delays in receiving your refund.
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