An assessment is the calculation SARS makes of a taxpayer's final tax for a tax year, once their income and deductions are known. The year it covers is called the year of assessment.
What it means
PAYE withheld through payroll is a running estimate of the tax due. At year-end the taxpayer's return is assessed: SARS works out the tax on the actual taxable income and compares it to the PAYE already paid. If too much was withheld there is a refund; if too little, an amount is payable. Accurate payroll keeps that gap small.
Where it fits in
Payroll feeds the assessment indirectly. The IRP5 reports the year's remuneration, deductions and PAYE, which SARS uses to pre-populate and check the individual's return. The closer the PAYE withheld was to the correct figure, the smaller the balance on assessment.
Key rules
- SARS's determination of final tax for a year of assessment.
- PAYE withheld is set off against the assessed tax.
- A shortfall is payable on assessment; an excess is refunded.
- Built from the income and deductions reported on the IRP5.
