Paragraph 6 (Fourth Schedule) – Failure to pay employees’ tax by employer

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6.

(1)     If an employer fails to pay any amount of employees’ tax for which the employer is liable within the period allowable for payment thereof in terms of paragraph 2 SARS must, in accordance with Chapter 15 of the Tax Administration Act, impose a penalty equal to ten per cent of such amount.

[Subparagraph (1) (pending amendment by section 14(1)(a) of Act 61 of 2008 repealed by section 271 read with paragraph 193 of Schedule 1 of Act 28 of 2011) substituted by section 271 read with paragraph 80(a) of Schedule 1 of Act 28 of 2011, by section 39 of Act 20 of 2021 and by section 6 of Act 21 of 2021]

(2)     ……….

(3)     ……….

(4)     ……….

Paragraph 5 (Fourth Schedule) – Personal liability of employer for payment of employees’ tax

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5.

(1)     Subject to the provisions of subparagraph (6), if an employer is personally liable for the payment of employees’ tax under Chapter 10 of the Tax Administration Act, the employer shall pay that amount to the Commissioner not later than the date on which payment should have been made if the employees’ tax had in fact been deducted or withheld in terms of paragraph 2.

[Subparagraph (1) substituted by section 19(a) of Act 18 of 2009, by section 271 read with paragraph 79 of Schedule 1 of Act 28 of 2011, by section 38 of Act 20 of 2021 and by section 5 of Act 16 of 2022]

(1A)  The 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 in terms of subparagraph (1).

(2)     Where 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 this paragraph.

(3)     An employer who has not been absolved from liability as provided in sub–paragraph (2) shall have a right of recovery against the employee in respect of the amount paid by the employer in terms of sub–paragraph (1) in respect of that employee, and such amount may in addition to any other right of recovery be deducted from future remuneration which may become payable by the employer to that employee, in such manner as the Commissioner may determine.

(4)     Until such time as an employee pays to his employer any amount which is due to the employer in terms of sub–paragraph (3), such employee shall not be entitled to receive from the employer an employees’ tax certificate in respect of that amount.

(5)     Any amount which an employer is required to pay in terms of sub–paragraph (1) and which the employer does not recover from the employee shall, insofar as the employer only is concerned, for the purposes of section 23(d), be deemed to be a penalty due and payable by that employer.

(6)     The provisions of sub–paragraph (1) shall not apply in respect of any amount or any portion of any amount of employees’ tax which an employer has failed to deduct or withhold and in respect of which the provisions of sub–paragraph (3) of paragraph 28 apply.

Paragraph 3 (Fourth Schedule) – Liability of any employer to deduct or withhold any amount of employees’ tax

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3.

 

(1)     The liability of any employer to deduct or withhold any amount of employees’ tax in terms of paragraph 2 shall not be reduced or extinguished by reason of the fact that the employer has a right or is otherwise than in terms of any law under an obligation to deduct or withhold any other amount from the employees’ remuneration, and such right or obligation shall notwithstanding anything to the contrary in any other law contained, for all purposes be deemed to have reference only to the amount of the remuneration remaining after the amount of employees’ tax referred to in that paragraph has been deducted or withheld.

 

(2)     The provisions of paragraph 2 shall apply in respect of all amounts payable by way of remuneration, notwithstanding the provisions of any law which provide that any such amount shall not be reduced or shall not be subject to attachment.

“Tax threshold” definition of Fourth Schedule

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“tax threshold” in relation to a natural person means the maximum amount of taxable income of that person in respect of a year of assessment which would result in no tax payable when the rates of tax contemplated in section 5 of this Act and the rebates contemplated in section 6 of this Act for that year of assessment are applied to the taxable income of that person;

“Representative employer” definition of Fourth Schedule

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“representative employer” means –

(a)     in the case of any company, the public officer of that company, or, in the event of such company being placed under business rescue in terms of Chapter 6 of the Companies Act, in liquidation or under judicial management, the business rescue practitioner, liquidator or judicial manager, as the case may be;

[Paragraph (a) substituted by section 7 of Act 44 of 2014 effective on 20 January 2015]

(b)     in the case of any municipality or any body corporate or unincorporated (other than a company or a partnership), any manager, secretary, officer or other person responsible for paying remuneration on behalf of such municipality or body;

(c)     in the case of a person under legal disability, any guardian, curator, administrator or other person having the management or control of the affairs of the person under legal disability; or

(d)     in the case of any employer who is not resident in the Republic, any agent of such employer having authority to pay remuneration,

who resides in the Republic, but nothing in this definition shall be construed as relieving any person from any liability, responsibility or duty imposed upon him or her by this Schedule; and

“Remuneration” definition of Fourth Schedule

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“remuneration” means any amount of income which is paid or is payable to any person by way of any salary, leave pay, wage, overtime pay, bonus, gratuity, commission, fee, emolument, pension, superannuation allowance, retiring allowance or stipend, whether in cash or otherwise and whether or not in respect of services rendered, including-

(a)     any amount referred to in paragraph (a), (c), (cA), (cB), (d), (e), (eA), (eD) or (f) of the definition of “gross income” in section 1 of this Act;

[Paragraph (a) substituted by section 44(1)(a) of Act 28 of 1997, by section 53(1)(b) of Act 59 of 2000, by section 6(1)(f) of Act 23 of 2015 and by section 5(1) of Act 12 of 2024 effective on 1 September 2024 (effective date in section 5(2) of Act 12 of 2024 as substituted by section 6 of Act 6 of 2025)]


(b)     any amount required to be included in such person’s gross income under paragraph (i) of that definition, excluding an amount described in paragraph 7 of the Seventh Schedule;


(bA)  any allowance or advance, which must be included in the taxable income of that person in terms of section 8(1)(a)(i), other than-

(i)      an allowance in respect of which paragraph (c) or (cA) applies; or


(ii)     an allowance or advance paid or granted to that person in respect of accommodation, meals or other incidental costs while that person is by reason of the duties of his or her office obliged to spend at least one night away from his or her usual place of residence in the Republic: Provided that where-


(aa)   such an allowance or advance was paid or granted to a person during any month in respect of a night away from his or her usual place of residence; and

(bb)   that person has not by the last day of the following month either spent the night away from his or her usual place of residence or refunded that allowance or advance to his or her employer,

that allowance or advance is deemed not to have been paid or granted to that person during that first-mentioned month in respect of accommodation, meals or other incidental costs, but is deemed to be an amount which has become payable to that person in that following month in respect of services rendered by that person;


(c)     50 per cent of the amount of any allowance referred to in section 8(1)(d) granted to the holder of a public office contemplated in section 8(1)(e),


(cA)   80 per cent of the amount of any allowance or advance in respect of transport expenses referred to in section 8(1)(b), other than any such allowance or advance contemplated in section 8(1)(b)(iii) that is based on the actual distance travelled by the recipient: Provided that where the employer is satisfied that at least 80 per cent of the use of the motor vehicle for a year of assessment will be for business purposes, then only 20 per cent of the amount of such allowance or advance must be included;

[Paragraph (cA) inserted by section 28 of Act 9 of 2006, substituted by section 17 of Act 18 of 2009, section 18 of Act 8 of 2010 and section 8 of Act 13 of 2017 effective on 1 March 2018, applies in respect of years of assessment commencing on or after that date]


(cB)   80 per cent of the amount of the taxable benefit as determined in terms of paragraph 7 of the Seventh Schedule: provided that where the employer is satisfied that at least 80 per cent of the use of the motor vehicle for a year of assessment will be for business purposes, then only 20 per cent of such amount must be included;


(cC)  100 per cent of so much of the amount paid or granted as an allowance or advance referred to in section 8(1)(b)(iii) as exceeds the amount determined by applying the rate per kilometre for the simplified method in the notice fixing the rate per kilometre under section 8(1)(b)(ii) and (iii) to the actual distance travelled;

[Paragraph (cC) to be inserted by section 8 of Act 13 of 2017 effective on 1 March 2018, applies in respect of years of assessment commencing on or after that date]


(d)     any gain determined in terms of section 8B, which must be included in that person’s income under that section;


(e)     any amount referred to section 8C which is required to be included in the income of that person;

[Paragraph (e) inserted by section 46 of Act 32 of 2004, substituted by section 6 of Act 23 of 2015 effective on 8 January 2016]


(f)      any amount deemed to be income accrued to that person in terms of section 7(11);


(g)     any amount received by or accrued to that person by way of a dividend contemplated in-


(i)      paragraph (dd) of the proviso to section 10(1)(k)(i);


(ii)     paragraph (ii) of the proviso to section 10(1)(k)(i);


(iii)    paragraph (jj) of the proviso to section 10(1)(k)(i);


(iv)    paragraph (kk) of the proviso to section 10(1)(k)(i),

[Subparagraph (iv) added by section 8 of Act 13 of 2017 effective on the date on which paragraph (f) of section 16(1) of the Taxation Laws Amendment Act, 2017, comes into operation, 18 December 2017]

[Paragraph (g) added by section 5 of Act 16 of 2016 effective on 1 March 2017 and applies in respect of any amount received or accrued on or after that date]

but not including–


(i)      ……….


(ii)     any amount paid or payable in respect of services rendered or to be rendered by any person (other than a person who is not a resident or an employee contemplated in paragraph (b), (c), (d) or (e) of the definition of “employee”) in the course of any trade carried on by him independently of the person by whom such amount is paid or payable and of the person to whom such services have been or are to be rendered: Provided that for the purposes of this paragraph a person shall be deemed not to carry on a trade independently as aforesaid if the services are required to be performed mainly at the premises of the person by whom such amount is paid or payable or of the person to whom such services were or are to be rendered and the person who rendered or will render the services is subject to the control or supervision of any other person as to the manner in which his or her duties are performed or to be performed or as to his or her hours of work: Provided further that a person will be deemed to be carrying on a trade independently as aforesaid if he throughout the year of assessment employs three or more employees who are on a full time basis engaged in the business of such person of rendering any such service, other than any employee who is a connected person in relation to such person;

[Paragraph (ii) substituted by section 47(1)(c) of Act 85 of 1974 and amended by section 44(1)(e) of Act 101 of 1990, by section 53(1)(c) of Act 59 of 2000, by section 54(1)(d), (e), (f) and (g) of Act 8 of 2007, by section 5(1)(d) of Act 16 of 2016 and by section 36 of Act 20 of 2021]


(iii)    any pension or additional pension under the Aged Persons Act, 1967 (Act No. 81 of 1967), or the Blind Persons Act, 1968 (Act No. 26 of 1968), any disability grant or additional or supplementary allowance under the Disability Grants Act, 1968 (Act No. 27 of 1968), or any grant or contribution under the provisions of section 89 of the Children’s Act, 1960 (Act No. 33 of 1960);


(iv)    ……….


(v)     ……….


(vi)    any amount paid or payable to any employee wholly in reimbursement of expenditure actually incurred by such employee in the course of his employment;


(vii)   ……….


(viii)  any annuity under an order of divorce or decree of judicial separation or under any agreement of separation;

“Provisional taxpayer” definition of Fourth Schedule

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“provisional taxpayer” means –

(a)     any person (other than a company) who derives income by way of-

(i)      any remuneration from an employer that is not registered in terms of paragraph 15; or

(ii)     any amount which does not constitute remuneration or an allowance or advance contemplated in section 8(1);

[Paragraph (a) substituted by section 5 of Act 16 of 2016 and section 8 of Act 13 of 2017 effective on 1 March 2017 and applies in respect of years of assessment commencing on or after that date]

(b)     any company;

[Paragraph (b) amended by section 2(a) of Act 43 of 2024]

(bA)  any labour broker in respect of which a certificate of exemption has been issued in terms of paragraph 2(5)(a); and

[Paragraph (bA) inserted by section 2(b) of Act 43 of 2024]

(c)     any person who is notified by the Commissioner that he or she is a provisional taxpayer,

but shall exclude –

(aa)   any public benefit organisation as contemplated in paragraph (a) of the definition of ‘public benefit organisation’ in section 30(1) that has been approved by the Commissioner in terms of section 30(3);

(bb)   any recreational club as contemplated in the definition of ‘recreational club’ in section 30A(1) that has been approved by the Commissioner in terms of section 30A(2);

[Paragraph (bb) amended by section 7 of Act 44 of 2014 effective on 1 March 2015]

(cc)    any body corporate, share block company or association of persons contemplated in section 10(1)(e);

(dd)    any-

(A)    person in respect of whose liability for normal tax for the relevant year of assessment payments are required to be made under section 33;

(B)    natural person who does not derive any income from the carrying on of any business, if-

(AA)  the taxable income of that person for the relevant year of assessment does not exceed the tax threshold; or

(BB)  the taxable income of that person for the relevant year of assessment which is derived from interest, dividends, foreign dividends, rental from the letting of fixed property and any remuneration from an employer that is not registered in terms of paragraph 15 does not exceed R30 000;

[Item (BB) substituted by section 5(1)(b) of Act 16 of 2016 effective on 1 March, 2017 and applicable in respect of years of assessment commencing on or after that date]

[Paragraph (dd) added by section 18 of Act 8 of 2010, amended by section 7 of Act 44 of 2014 effective on 1 March 2015, substituted by section 6(d) of Act 23 of 2015 effective on 8 January 2016, amended by section 6(e) of Act 23 of 2015 effective on 1 March 2016]

(ee)   a small business funding entity;

[Paragraph (ee) added by section 7(1)(c) of Act 44 of 2014, substituted by section 6(1)(d) of Act 23 of 2015 and amended by section 6(1)(e) of Act 23 of 2015 and by section 6 of Act 24 of 2020]

(ff)     a deceased estate; and

[Paragraph (ff) added by section 6(1)(e) of Act 23 of 2015 and amended by section 6 of Act 24 of 2020]

(gg)   any entity as defined in section 30B that has been approved by the Commissioner in terms of section 30B(2);

[Definition of “provisional taxpayer” amended by section 47(1)(b) of Act 85 of 1974, by section 38 of Act 121 of 1984, by section 44(1)(a) of Act 129 of 1991, by section 53(1)(a) of Act 59 of 2000, by section 46(1)(a) of Act 32 of 2004, by section 49(1)(a) and (b) of Act 31 of 2005, by section 39(g) of Act 20 of 2006, by section 54(1)(c) of Act 8 of 2007, by section 43(b) of Act 3 of 2008 and substituted by section 17(1)(a) of Act 18 of 2009 deemed effective on 1 January, 2009 and applicable in respect of years of assessment ending on or after that date. Paragraph (gg) added by section 6 of Act 24 of 2020]