PAY NOW ARGUE LATER PRINCIPLE CLARIFIED BY SARS
27 June 2011
Posted by: SAIT Technical
Juta's Tax Law Review - June 2011
The principle that a taxpayer first has to pay outstanding taxes before disputing them, has been recognized by the Constitutional Court in Metcash Trading Ltd v CSARS 2001 (1) SA 1109 (CC). However, the law gives SARS a discretion to give an extension of payment. In the past uncertainty existed exactly when SARS will grant such an extension. In a Media Release SARS published the factors that they will take into account when they decide on granting an extension.
These factors are:
- the compliance history of the taxpayer;
- the risk of dissipation of assets during the period of suspension; whether the taxpayer is able to provide adequate security for the payment of the amount involved;
- whether payment of the amount involved would result in irreparable financial hardship to the taxpayer;
- and whether the objection or appeal is frivolous or vexatious.
The interest paid in terms of the amendments will be paid at the same rate that SARS normally charges on outstanding debt (currently 9.5%), which is four percentage points higher than the rate paid on refunds of overpaid provisional tax.