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Can SARS’ interest charge per section 89quat be waived?

06 May 2015   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: Is interest under section 89 a statutory charge which cannot be waived?

As far as I understand 89quat(2) interest is reversible under Section 89quat(3) if the Commissioner is satisfied that the interest payable in terms of Section 89quat(2) is a result of circumstances beyond the control of the taxpayer. There is however no specific Section under Section 89 reversing Section 89 interest.

A: The deletion of both section 89(2) and section 89quat from the Income Tax Act is not effective yet and they are still effective in their present form.  You are correct that section 89 does not allow for SARS to reverse interest levied under section 89. 

SARS makes the following comment in Interpretation note 68:

"Remittal of interest: A taxpayer may request a senior SARS official to direct that so much of the interest as is attributable to prescribed circumstances beyond the taxpayer’s control, is not payable by the taxpayer. These circumstances are limited to a natural or human-made disaster, a civil disturbance or disruption in services; or a serious illness or accident [see section 187(6) read with 187(7)]. As section 187(6) refers to interest imposed under section 187(1), the remittal only applies to interest payable on a tax debt in respect of understatement penalties or a jeopardy assessment as set out above.

Section 187(1) also regulates the accrual of interest on refunds payable by SARS. However, because section 188(3) did not come into operation such interest will only accrue once section 188(3) comes into operation.”

We submit that section 187(6) of the Tax Administration Act applies.  It reads as follows: If a senior SARS official is satisfied that interest payable by a taxpayer under subsection (1) is payable as a result of circumstances beyond the taxpayer’s control, the official may, unless prohibited by a tax Act, direct that so much of the interest as is attributable to the circumstances is not payable by the taxpayer. 

A request can therefore be made in terms of section 187(6) (of the Tax Administration Act) to reverse the interest levied under section 89 (of the Income Tax Act or a Tax Act). 

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.


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