FAQ - 7 October 2015
07 October 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
1. PAYE deducted but not paid to SARS – who is liable?
Q. How does SARS treat tax credits
if the employer has deducted PAYE from an employee but has failed to pay
it over to SARS? Who is liable for this
type of non-compliance?
A: There are a number
of provisions which pertain to the matter of employer/employee liability
4 of the 4th Schedule to the Income Tax Act states:
amount required to be deducted or withheld in terms of paragraph 2 shall
be a debt due to the State and the employer concerned shall
save as otherwise provided be absolutely liable for the due payment
thereof to the Commissioner.” (own emphasis)
para 5(1A) states:
liability of the employer as contemplated in paragraph 2 must be deemed to have
been discharged if the employer made payment of the outstanding employees’ tax”
implication from this provision is that the employer is liable for the PAYE.
must be viewed together with para 5(2), which states:
the employer has failed to deduct or withhold employees’ tax in terms
of paragraph 2 and the Commissioner is satisfied that the failure was not due
to an intent to postpone payment of the tax or to evade the employer’s
obligations under this Schedule, the Commissioner may, if he is satisfied that
there is a reasonable prospect of ultimately recovering the tax from the
employee, absolve the employer from his liability under sub-paragraph (1) of
if the employer never deducted the amount, SARS can come after the employee.
28(3) additionally provides that:
the Commissioner is satisfied that the amount or any portion of the amount
of employees’ tax shown in any employees’ tax certificate has not been
deducted or withheld by the … the employer and the employee shall be
jointly and severally liable to pay to the Commissioner the amount which should
not have been so applied and such amount shall be recoverable under this Act as
if it were a tax.”
again, SARS can only pursue the employee if the employer never made the
deduction. This doesn’t refer to where the employer withheld the PAYE but never
paid it over to SARS.
2. What is a
taxpayer’s right in terms of retaining information for more than 5 years?
received a mail from SARS this morning. It’s the first notice that was
given with regards to outstanding debt. It dates back 8 – 14 years.
What are the taxpayer’s rights? It is much
longer than the five years/seven years that the Income Tax Act/Companies Act
prescribes to retain documents.
A: To verify the
amount of tax SARS alleges your client owes, you’ll obviously need information
such as statements of account, tax returns, assessments, etc. Alleged tax debts
must be traced back to an assessment (see s170 of the TAA). Proof of the
assessments ought to therefore be provided by SARS.
though you may have disposed of those records, SARS may have all of this
information. You can request it from them in terms of the Promotion of Access
to Information Act, 2000 (commonly referred to as PAIA).
private and public bodies have a duty to provide the access to the requested
records, unless specifically refused in terms of PAIA. This means that any
record held by the State or the private sector may be accessed upon request,
which includes SARS records. SARS has a PAIA manual that deals with the
practical implementation of their obligations to taxpayers in this regard. The
following extract appears under point number 8 of their manual:
may obtain personal information about themselves such as a copy of their own
tax return, assessment, statement of account and similar records, including
records submitted to SARS by the taxpayer or on the taxpayer’s behalf. SARS
will provide such information on request to the office where the records are
held. A fee may be charged for copying of records depending on the volume
Manual On The
Promotion Of Access To Information Act, 2000 (especially from
point 9 onwards) will provide you with the necessary guidance on how to obtain
these records from SARS.
may want to communicate the abovementioned to the SARS official in order to get
time to sort this all out. I would also ask the SARS official in terms of what
provision they are intending to institute legal action against the taxpayer,
given the fact that no notice was received of this tax debt (assuming this was
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.