This is good news! A Reduced Assessment means you owe LESS tax. i.e SARS has assessed your taxable income to be a lower or reduced amount compared to their Original Assessment.
The Reduced Assessment can be confusing to taxpayers who think they need to pay the amount on it. However, it’s important to realise the amount on this assessment must not be viewed in isolation. It must be added to the Original Assessment and the OVERALL balance is the amount that is due or refundable.
It is advisable to always request a Statement of Account to see the final balance that is due or refundable to/by SARS. A Statement of Account can be requested in eFiling by navigating to your tax return and clicking on ‘Request Historic Notice’.
Let's look at an example:
Matthew submitted his tax return for 2021 and received an ITA34 (assessment) showing that he was due a tax refund of R4 500. This was shown as a negative amount on his assessment. He expected his refund to be bigger. He soon realised he had made an error and left off his travel allowance claim. He therefore submitted a correction to SARS and received a 'Reduced Assessment' of R3 500. He was very confused as to what this all meant.
A Tax Practitioner explained that the final amount due from SARS was in fact R8 000, and this was calculated by adding the results of the two assessments together.
i.e.
Original Assessment A -R 4 500 Refund
Reduced Assessment B -R 3 500 Refund
Overall balance (A + B ) -R 8 000 Tax Refund due to Matthew
Hopefully this blog clarifies many of your questions around Reduced Assessments. If you are still left confused, please don’t hesitate to contact our Helpdesk
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