Due to an administrative slip-up by the South African Revenue Service (SARS), taxpayers will have to review their statement of account once more to ensure that they are compliant.
On the 29th of April 2016, Government increased the interest rates (including debts that should be paid into a Revenue Fund) from 10.25% to 10.5 %. However, adjustments were only made to the SARS system on the 1st of June 2017 with retrospective effect, resulting in potential compliance and clearance problems.
Consequences for taxpayers:
Tax Clearance and Tax Compliance Status: Taxpayers who’ve paid interest to SARS after the 1st of July 2016, will now have an additional tax liability as a result of the late adjustment. Also note that compliance and tax clearance problems might arise as accounts may reflect outstanding interest amounts.
Voluntary Disclosure Programme (VDP) Agreements: Interest amounts will now be outstanding for agreements that are already signed and paid.
Debts payable by SARS to taxpayers: Taxpayers must ensure that interest that they have received from SARS after the 1st of July 2016 was correctly calculated by applying the rate of 6.5%. (Note that debts payable by SARS to taxpayers is calculated at 4 percentage points below the prescribed rate of interest)
We advise taxpayers to review their statements of account to ensure that they have received and paid the correct amount of interest. According to SARS’s media releases, they will not waive the interest on ordinary debt, but will do so with regard to estates, compromises and settlements.
Should you require assistance, contact the C2M Tax Department on 021 914 0261 or via email on email@example.com
*The increase in the interest rate was published in Government Gazette No 39960 of 2016.