The 2026 tax season in South Africa, which runs from March 1, 2025, to February 28, 2026, has brought renewed focus on the growing risk of audits by the South African Revenue Service (Sars). Taxpayers are being advised to review their records and ensure their filings are accurate, as Sars continues to use advanced data analytics and artificial intelligence to detect discrepancies in returns. This heightened scrutiny has led to a rise in the number of audits, even for those who file correctly and on time.

Audit risk on the rise

Sars has been expanding its compliance operations with additional funding from the National Treasury; the agency now has the ability to cross-check information from various sources, including employers, banks, and investment platforms. This means even small or unintentional errors in tax returns are more likely to be flagged, though For individuals, this could involve claims for travel allowances, home office deductions, or rental income. For trusts. It may relate to capital gains tax treatment or distribution allocations; SMMEs, on the other hand, are often scrutinized for VAT submissions, PAYE compliance, and expense deductions.

The audit process can be time-consuming and technically complex; Taxpayers may be required to retrieve detailed documents, submit formal written responses, and attend meetings or hearings with Sars. In some cases. Disputes can take months to resolve. With outcomes sometimes taking up to a year to finalize; the process can be especially challenging for individuals and smaller businesses without in-house legal or tax teams.

According to Milne, chief broking officer at Aon South Africa, ‘An audit does not necessarily imply wrongdoing. It is often part of routine compliance checks. However, the process can be lengthy and stressful, and the financial burden can be significant.’

Costs of being audited

The financial implications of an audit can be substantial. Taxpayers may need to hire specialist tax practitioners or legal experts to handle the process. These professional fees can add up quickly, even if the audit ultimately concludes that everything was correctly declared. For smaller taxpayers, this can create a significant cash flow strain.

While many rely on accountants for regular tax submissions, an audit or dispute may require more specialized expertise. This can include technical tax opinions, formal written submissions, and preparing objections or appeals. The cost of these services is not always covered by the taxpayer’s insurance, and in some cases, the expenses can be borne entirely by the individual or business.

For individuals and SMMEs, the cost of an audit can be particularly burdensome. Larger corporations often have internal teams to handle such issues, while smaller taxpayers may not have the same resources. This disparity has led to calls for better support systems to help smaller taxpayers manage the risks associated with audits.

What taxpayers can do

As the 2026 tax season approaches, taxpayers are being advised to prepare their records in advance. Ensuring that all documents are up to date and well-organized can help mitigate the stress of an audit. Understanding the deductions and claims being made is also key, as any errors could lead to complications during the audit process.

Taxpayers should also consider whether they can afford the potential costs of an audit. Having a financial buffer or insurance coverage can provide peace of mind. Some insurance policies offer coverage for tax disputes, allowing taxpayers to access professional support without bearing the full cost themselves.

Proactive planning is key in an environment where audits are becoming more common. Being prepared with organized records, a clear understanding of tax claims, and the necessary financial support can help taxpayers handle the process with confidence.

According to Sars officials, the number of audits has increased by 15% in the past two years. This trend is expected to continue as the agency continues to invest in technology and compliance tools. Taxpayers are being encouraged to stay informed and take steps to protect their financial interests.

The 2026 tax season is a critical time for taxpayers in South Africa. With audits becoming more frequent and detailed, it is more important than ever to ensure that all tax filings are accurate and well-documented. Those who are prepared will be better equipped to handle any potential issues that may arise during the audit process.