FAQ - 29 September 2015
27 January 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
1. How does one log a dispute with the Tax Ombud?
Q: I would like to know do you perhaps have a document outlining the process or procedure to follow to log a dispute at the Tax Ombud.
A: With regards to your query, you need to complete the complaints form and send it to the Tax Ombud with all your supporting documents such as SARS references numbers email and other correspondence etc.
There are various ways to contact them:
Phone: 0800 662 837 or (+27) 12 431-9105
Fax: (+ 27) 12- 452-5013
Online complaint form
You could also visit their office for an interview or a consultation, if you prefer. It is better to write first and ask for an interview in the letter.
Postal Address: PO Box 12314; Hatfield; 0028
Physical address: IParioli building, Block A3, Ground Floor; 1166 Park Street (Between Jan Shoba/old Duncan & Grosvenor Streets), Hatfield, Pretoria, 0157)
2. Must PAYE be deducted from an arbitration award?
Q: I would like to confirm that I have given my client the correct information. The case is as follows:
An ex-employee took my client to CCMA for unfair dismissal and won an arbitration award of 2 months’ salary. The Commissioner’s award states:
"The respondent is ordered to pay the applicant compensation equivalent to two months’ salary calculated at his rate of pay at the time of dismissal as follows: R17280.00 x 2 months = R34560.00”
My client paid R34560.00 less PAYE of R7308.38 and UIF R148.72 = R27102.90 as per the definition of Gross income in the Income Tax Act Section 1 (c), (d), and (f).
My client has now received a fax from the labour lawyers saying:
"The award itself is very clear as to what amount has to be paid and by which date such payment had to take place in full. Take further notice that no deductions are permitted from arbitration awards and that the awarded amount must be paid in fill.”
Does this not go against the definition of gross income? What would be the correct advise to give?
A: The obligation to withhold employees’ tax applies in our view, notwithstanding the CCMA order, as paragraph 3 Fourth Schedule of the Income Tax Act deems the amount to be subject to the withholding obligation as is therefore the amount after taxes withheld. The obligation to pay the CCMA award will therefore be the after tax amount.
In our view the amount stated as being for unfair dismissal is in respect of the termination of employment which are capital amounts specifically included in para (d)(i) of the definition of gross income in section 1 of the Income Tax Act. The amount of employees tax to be withheld by the employer from this amount must be ascertained from SARS through a directive in terms of para 9(3) Fourth Schedule of the Income Tax Act.
The SARS legal position and tax obligation is set out in detail in SARS’ Interpretation Note 26.
3. Does the law allow SARS to require payment of PAYE and UIF owing for 10 years?
Q: Could you please advise me, according to the new Tax Administration Act (TAA). Is SARS able to claim PAYE and UIF that was not paid about ten years ago? They have not communicated that these amounts were outstanding. Of course they have been charging interest for all these years. What recourse does my client have?
A: Once an amount of PAYE or UIF becomes payable it is an outstanding tax debt in terms of the section 1 of the TAA definition of "tax” read with section 169. The recoverable debt only prescribes after 15 years from date of assessment in terms of section 171 of the TAA, which for PAYE & UIF are self-assessment taxes will be the date of submission of the relevant return.
Your client will first have to determine whether the returns and payments for the relevant periods were in fact done. If so, then an affidavit can be submitted to SARS declaring that these returns and payments were made and if possible, relevant evidence should be submitted, including indirect evidence such as statement of accounts showing these periods as submitted and paid.
4. Is there a way an audit could be conducted in a shorter time frame?
Q: We have a number of individual tax clients that have been selected for an audit for their 2014 tax submission. We have been advised by SARS that this process can take up to 6 months to even be seen by an auditor. Is there any way that we can speed up this process? At least contact the auditor involved and request details that are being investigated.
A: Technically, where SARS conducts an audit they must in terms of section 42 of the Tax Administration Act (TAA) notify the taxpayer every 90 days of the progress of the audit. There is however no specific mechanism to compel SARS to deal with the matter faster. The problem arises that many of the audits done by SARS are according to them are "desks audits” similar to inspection and verification which they are of the opinion therefore do not fall within section 42 which they interpret as being field audits.
We are of the view that section 42 of the TAA does not make this distinction between field and desk audits and should SARS state that they are conducting an audit, and then the taxpayer is entitled to request the SARS to keep them informed of the progress. Upon failure to do so you are welcome to lodge a complaint in this regard as the failure to notify would be an administrative matter.
Disclaimer: Nothing in these queries and answers should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answers, SAIT do not accept any responsibility for consequences of decisions taken based on these queries and answers. It remains your own responsibility to consult the relevant primary resources when taking a decision.