Are you ready if SARS comes knocking?

As South Africa’s 2026 tax season approaches (1 March 2025 – 28 February 2026 assessment), individuals, trustees and small to medium-sized enterprises (SMMEs) are preparing to submit their returns.

While filing accurately and on time is essential, many taxpayers overlook one important reality: even fully compliant taxpayers can be selected for an audit by the South African Revenue Service (SARS).

Audits are becoming more common

SARS continues to enhance its compliance capabilities through advanced data analytics and artificial intelligence (AI). With additional funding from National Treasury and increasingly sophisticated systems, it is able to cross-check information from multiple sources: including employers, banks, medical schemes and investment platforms. This means discrepancies, even small or unintentional ones, are more likely to be flagged.

For individuals, this could involve:

• Travel allowance, home office claims or rental income declarations.
• Provisional tax submissions.
• Capital gains calculations on property or shares.

For trusts:

• Distribution allocations.
• Capital gains tax treatment.
• Beneficiary tax implications.

For SMMEs:

• VAT submissions.
• PAYE and employee tax compliance.
• Income tax and expense deductions.

An audit does not automatically imply wrongdoing. In many cases, it is part of routine compliance checks and often results in incorrect tax reassessments whereby SARS unfairly demands additional tax payments from you. The process can be lengthy, technical and stressful.

The real cost of an audit

“Audits are becoming more detailed, and disputing incorrect or unfair demands by SARS can take months – sometimes up to a year – to finalise,” explains Ann Milne from Aon South Africa, an insurance brokerage and risk adviser.

“Responding to an audit and resolving disputes often requires detailed document retrieval, formal written submissions, technical tax opinions, meetings or hearings with SARS, and possible objections or appeals.

“While many taxpayers rely on trusted accountants for annual submissions, a full audit or dispute may require specialist tax practitioners or legal experts. These professional fees can quickly add up – even if SARS ultimately finds that everything was correctly declared. For individuals and SMMEs without in-house finance teams, these costs can place real strain on cash flow,” she adds.

Understanding tax risk insurance

To help mitigate this risk, Aon South Africa offers Tax Risk Insurance that provides financial protection for the professional fees associated with managing a SARS audit or dispute.

Depending on the nature of the review, it can cover matters relating to:

• Income tax
• VAT
• Capital gains tax
• PAYE and employee taxes
• Dispute resolution hearings and appeals

“Importantly, the policy covers the professional costs of responding to the audit – including accountant and specialist fees – rather than the tax itself,” says Milne.

Why it matters for smaller taxpayers

Larger corporates often have internal tax departments and legal teams. Most individuals, trusts and smaller businesses do not. Having a solution like this helps level the playing field by giving policyholders access to experienced tax professionals who understand both the technical legislation and the procedural requirements of SARS.

This ensures:

• Your rights as a taxpayer are protected.
• Submissions are technically sound.
• Deadlines are met.
• Objections or appeals are properly structured.

Once cover is in place, it applies regardless of how far back SARS decides to review your records, and multiple claims can typically be made within a policy year if necessary.

A practical step for tax season 2026

As you prepare for tax season 2026, it’s worth asking:

• Are your records up to date and well-organised?
• Do you understand the deductions and claims you’re making?
• Could you comfortably absorb professional fees if SARS selected you for review?

Being prepared is about more than filing on time. It’s about understanding your exposure and ensuring you have the right support in place should you need it.

“In an increasingly audit-driven tax environment, proactive planning can provide peace of mind – replacing uncertainty with the assurance that, if SARS does come knocking, you won’t be navigating the process alone,” Milne concludes.