CHAPTER 12
INTEREST
Category: Tax Administration Act No. 28 of 2011
Part B – Temporary write off of tax debts (TAA)
Part B
Temporary write off of tax debt
Part C – Taxpayer account and allocation of payments (TAA)
Part C
Taxpayer account and allocation of payments
Section 176 (TAA) – Withdrawal of statement and reinstatement of proceedings
176. Withdrawal of statement and reinstitution of proceedings
(1) SARS may withdraw a certified statement filed under section 172 by sending a notice of withdrawal to the relevant clerk or registrar upon which the statement ceases to have effect.
(2) SARS may file a new statement under section 172 setting out an amount of the tax debt included in a withdrawn statement.
(3) If SARS is satisfied that a person has paid the full amount of the tax debt set out in a certified statement filed under section 172 and has no other outstanding tax debts, SARS must withdraw the statement if requested by the person in the prescribed form and manner.
Section 187 (TAA) – General interest rules
187. General interest rules
(1) If a tax debt or refund payable by SARS is not paid in full by the effective date, interest accrues, and is payable, on the amount of the outstanding balance of the tax debt or refund-
[Words preceding paragraph (a) substituted by section 59 of Act 23 of 2015 effective on 1 October 2012]
(a) at the rate provided under section 189; and
(b) for the period provided under section 188.
(2) Interest payable under a tax Act is calculated on-
(a) the daily balance owing; or
(b) the daily balance owing and compounded monthly, which method of determining interest will apply to a tax type from the date the Commissioner prescribes it by public notice.
(3) The effective date for purposes of the calculation of interest in relation to-
(a) tax other than income tax or estate duty for any tax period, is the date by which tax for the tax period is due and payable under a tax Act;
(b) income tax for any year of assessment, is the date falling seven months after the last day of that year in the case of a taxpayer that has a year of assessment ending on the last day of February, and six months in any other case;
(c) estate duty for any period, is the earlier of the date of assessment or 12 months after the date of death;
(d) a fixed amount penalty referred to in section 210, is the date of assessment of the penalty, and in relation to an increment of the penalty under section 211(2), the date of the increment;
(e) a percentage based penalty referred to in section 213, is the date by which tax for the tax period should have been paid;
[Paragraph (e) amended by section 59 of Act 23 of 2015 effective on 8 January 2016]
(f) an understatement penalty, is the effective date for the tax understated;
[Paragraph (f) amended by section 59(1)(b) of Act 23 of 2015 and by section 31(a) of Act 24 of 2020]
(g) an outstanding tax debt referred to in section 190(5), is the date of payment of a refund which is not properly payable under a tax Act; and
[Paragraph (g) added by section 59(1)(b) of Act 23 of 2015 and amended by section 31(b) of Act 24 of 2020]
(h) an erroneous payment referred to in section 190(1)(b), is the date 30 days after the date that the payment was made.
[Paragraph (h) added by section 31(c) of Act 24 of 2020]
(4) The effective date in relation to an additional assessment or reduced assessment is the effective date in relation to the tax payable under the original assessment.
(5) The effective date in relation to a jeopardy assessment is the date for payment specified in the jeopardy assessment.
(6) 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.
(7) The circumstances referred to in subsection (6) are limited to-
(a) a natural or human-made disaster;
(b) a civil disturbance or disruption in services; or
(c) a serious illness or accident.
(8) SARS may not make a direction that interest is not payable under subsection (6) after the expiry of three years, in the case of an assessment by SARS, or five years, in the case of self-assessment, from the date of assessment of the tax in respect of which the interest accrued.
[Subsection (8) added by section 59 of Act 23 of 2015 effective on 8 January 2016]
Section 195 (TAA) – Temporary write off of tax debt
195. Temporary write off of tax debt
(1) A senior SARS official may decide to temporarily “write off” an amount of tax debt-
(a) if satisfied that the tax debt is uneconomical to pursue as described in section 196 at that time; or
(b) for the duration of the period that the “debtor” is subject to business rescue proceedings under Chapter 6 of the “Companies Act”, as referred to in section 132 of that Act.
(2) A decision by the senior SARS official to temporarily ‘write off’ an amount of tax debt does not absolve the ‘debtor’ from the liability for that tax debt.
(3) A senior SARS official may at any time withdraw the decision to temporarily ‘write off’ a tax debt if satisfied that the tax debt is no longer uneconomical to pursue as referred to in section 196 and that the decision to temporarily ‘write off’ would jeopardise the general tax collection effort.
Section 165 (TAA) – Taxpayer account
165. Taxpayer account
(1) SARS must maintain one or more taxpayer accounts for each taxpayer.
(2) The taxpayer account must reflect the tax liability in respect of each tax type included in the account.
(3) The taxpayer account must record details for all tax periods of-
(a) the tax liability;
(b) any penalty imposed;
(c) the interest payable on outstanding tax debts;
(d) the tax liability for any other tax type;
(e) tax payments made by or on behalf of the taxpayer; and
(f) any credit for amounts paid that the taxpayer is entitled to have set off against the taxpayer’s tax liability.
(4) From time to time, or when requested by the taxpayer, SARS must send to the taxpayer a statement of account, reflecting the amounts currently due and the details that SARS considers appropriate.
Part C – Sequestration, liquidation and winding-up proceedings (TAA)
Part C
Sequestration, liquidation and winding-up proceedings
Section 188 (TAA) – Period over which interest accrues
188. Period over which interest accrues
(1) Unless otherwise provided in a tax Act, interest payable under section 187 is imposed for the period from the effective date of the tax to the date the tax is paid.
(2) Interest payable in respect of the-
(a) first payment of provisional tax, is imposed from the effective date for the first payment of provisional tax until the earlier of the date on which the payment is made or the effective date for the second payment of provisional tax;
[Paragraph (a) amended by section 32(a) of Act 24 of 2020]
(b) second payment of provisional tax, is imposed from the effective date for the second payment of provisional tax until the earlier of the date on which the payment is made or the effective date for income tax for the relevant year of assessment;
[Paragraph (b) amended by section 32(b) of Act 24 of 2020]
(c) the first payment under section 5(1) or 5A of the Mineral and Petroleum Resources Royalty (Administration) Act 2008 (Act 29 of 2008), is imposed from the effective date for the first payment until the earlier of the date on which the payment is made or the effective date for the second payment under section 5(2) or 5A of that Act for the relevant year of assessment; and
[Paragraph (c) added by section 32(c) of Act 24 of 2020]
(d) the second payment under section 5(2) or 5A of the Mineral and Petroleum Resources Royalty (Administration) Act 2008 (Act 29 of 2008), is imposed from the effective date for the second payment until the earlier of the date on which the payment is made or the effective date for mineral and petroleum resources royalty under section 6(2) of that Act for the relevant year of assessment.
[Paragraph (d) added by section 32(c) of Act 24 of 2020]
(3) Unless otherwise provided under a tax Act-
(a) interest on an amount refundable under section 190 is calculated from the later of the effective date or the date that the excess was received by SARS to the date the refunded tax is paid; and
(b) for this purpose, if a refund is offset against a liability of the taxpayer under section 191, the date on which the offset is effected is considered to be the date of payment of the refund.
Section 196 (TAA) – Tax debt uneconomical to pursue
196. Tax debt uneconomical to pursue
(1) A tax debt is uneconomical to pursue if a senior SARS official is satisfied that the total cost of recovery of that tax debt will in all likelihood exceed the anticipated amount to be recovered in respect of the outstanding tax debt.
(2) In determining whether the cost of recovery is likely to exceed the anticipated amount to be recovered as referred to in subsection (1), a senior SARS official must have regard to-
(a) the amount of the tax debt;
(b) the length of time that the tax debt has been outstanding;
(c) the steps taken to date to recover the tax debt and the costs involved in those steps, including steps taken to locate or trace the ‘debtor’;
(d) the likely costs of continuing action to recover the tax debt and the anticipated return from that action, including the likely recovery of costs that may be awarded to SARS;
(e) the financial position of the ‘debtor’, including that ‘debtor’s’ assets and liabilities, cash flow, and possible future income streams; and
(f) any other information available with regard to the recoverability of the tax debt.