Practical steps to prepare for the 2025 Tax Season

Practical steps to prepare for the 2025 Tax Season

• 06 May 2025
• Tax Administration
• Adv Christel van Wyk

The 2025 Tax Season will likely be announced soon, with filing expected to commence around July 2025. SARS audits and verifications are on the rise, creating uncertainty and anxiety for many taxpayers. However, early and strategic planning can go a long way in ensuring a smooth and efficient tax filing process.

Adopting a structured, phased approach is recommended. The initial steps should include basic checks and balances, such as ensuring both you and your tax practitioner have access to eFiling, updating your contact and banking details, and reviewing your tax compliance status. Any outstanding tax returns should be submitted, and any tax debt actively managed. Addressing these issues before Tax Season begins will allow you to start with a clean slate.

It's also important to take a high-level view of your overall tax position: this includes reviewing all sources of income, any deductible expenses, and income that may be exempt from tax. The information submitted in your return must be accurate and complete in all respects.

While some third-party tax certificates may only become available once Tax Season officially opens, you can begin your preparation early. This includes drafting schedules and calculating the following:

• All income streams, including detailed breakdowns of worldwide gross income, the source and nature of each income stream, and reconciliation with bank statements;
• Capital gains realised;
• Exempt income, along with justifications for exemption; and
• Tax deductions, supported by accurate records and documentation.

It's a good idea to prepare a detailed motivation letter, explaining the source and nature of the income, the rationale for any deductions, and how you meet the legislative requirements. Your tax practitioner can help refine this letter as needed, especially where there is uncertainty.

Ahead of the Tax Season, you should ideally gather all required supporting documents and be fully audit-ready. SARS has broad audit and verification powers, and taxpayers are usually required to respond with supporting documentation within tight deadlines.

Careful consideration should also be given to the correct tax treatment of items, especially in light of recent legislative changes. Where legislation is complex or a tax position is uncertain, professional advice should be sought. A written opinion from a tax expert can support the reasonableness of a tax position and help mitigate the risk of penalties. Understatement penalties can be substantial and are based on the taxpayer's behaviour. Although SARS bears the burden of proving the grounds for such penalties, taxpayers should be prepared to justify their positions and take early action, such as filing a Voluntary Disclosure if needed.

As tax treatment can change year to year, taxpayers must remain aware of applicable tax principles, recent legislative amendments, and relevant case law. This ensures that disclosures in the current tax return are accurate and appropriate.

Once the tax return and supporting documents have been submitted, SARS may initiate a verification. The turnaround time for providing additional documents is typically short. If SARS requests documents in a specific format, and you cannot comply, you should be ready to explain why and provide the best available alternative.

In summary, starting early and being proactive in preparing for the 2025 Tax Season will help ensure full tax compliance and minimise potential challenges and frustrations along the way.

earn more about taxpayers' constitutional right to object and appeal against SARS assessments or decisions in our upcoming webinar – register now to secure your spot.

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