By Delecia Venter, Tax Director, PKF Port Elizabeth

Attention: Company Taxpayers

SARS has issued warnings that if company tax returns are not submitted by the applicable year of assessment, they may issue estimated assessments and levy penalties based on the information available to them. This represents a serious compliance risk that could affect both your company’s cash flow and overall tax liability.

What is an Estimated Assessment?

SARS can issue an estimated assessment under Section 95 of the Tax Administration Act when a company does not:

• submit a return on time
• Submits an incomplete or incorrect return
• Fails to provide requested information

Essentially, SARS calculates your tax liability based on available information rather than waiting for your actual return.

Sources of Information SARS Uses

SARS can estimate a company’s tax liability using various sources, including, but not limited to:

• Previous year company tax returns
• PAYE/employee data submitted by employers
• VAT and other indirect tax submissions
• Third-party information such as bank, investment, or auditor reports
• Customs data
• Publicly filed financial statements and statutory reports

These data points allow SARS to construct a reasonable estimate even if your actual return is not submitted.

Why This Matters

• Estimated assessments may not reflect your actual liability, sometimes leading to higher tax.
• Companies would generally have 40 business days to submit a revised return from the date of the estimated assessment.
• If no action is taken, the estimated assessment can become final and binding, with possible penalties and interest.

SARS has become more active in enforcement, using automation and third-party data to issue estimated assessments faster than before.

Estimated assessments are SARS’ way of enforcing timely compliance.

Timely submissions are the best way to protect your company. If your company is at risk of an estimated assessment, or if you need help preparing your returns, please contact your nearest PKF office.