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Can an employee be held liable for the PAYE his employer didn’t pay over to SARS?

10 March 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: I attend to a number of employees who after years of service have now been advised that the employer has dealt fraudulently with SARS and has not paid over employees taxes due.

SARS in an audit has two different opinions. One office agrees the employees cannot be held responsible and liable for taxes not paid by the employer the other has blatantly disallowed the PAYE credit on the "fraudulently" issued IRP'5.

A: Ultimately the liability to withhold employees’ tax is with the employer in terms of part II of the 4th Schedule to the Income Tax Act. Where the employer did not withhold employees tax from the employee, the employee may be held jointly liable (with the employer) for the payment of the employees taxes.

In terms of para 13(4) of the 4th Schedule, any employer who deducted or withheld employees tax from an employee must issue that employee with a tax certificate with a tax certificate in a form and manner as prescribed by the Commissioner.


The liability to deduct or withhold and pay any amounts of employee’s tax over to SARS is with the employer. Provided that the employer therefore deducted or withheld such amounts from the employee, the employer must issue a tax certificate notwithstanding the fact that the employer failed to pay those amounts to SARS. The employee must be able to prove that such amounts were withheld by his/her employer in the form of payslips, service contract etc. Where the no employees taxes was withheld from the employee, the employer has the right of recovery from the employee, and the employer may refuse to issue a tax certificate to the employee until such time as the employee has paid such amount owing to the employer –(see para 5 of the 4th Schedule).

It is my understanding that the employer in this instance withheld the employees’ taxes from his employees but failed to pay it over to SARS. Provided that the employees can prove that such amounts were withheld by the employer, SARS must take any amount of employees taxes into account proven to have been withheld by the employer. This is my view but SARS may challenge this as the 4th Schedule is not clear in this regard.

Disclaimer: Nothing in this query and answer 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 answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


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