“SARS has awarded itself a 30-day interest-free holiday on taxpayer money.” According to Moneyweb, the law now allows the revenue service to reduce the amount of interest it must pay a taxpayer in the event of an overpayment.
A “sneaky” new amendment in South African tax laws now gives SARS a 30-day interest-free ‘holiday’ when having to pay taxpayers back any money owed, while taxpayers themselves are still immediately liable for interest on any monies they owe SARS. The change came through in a recent amendment to the Tax Administration Act (TAA). Before, both SARS and taxpayers had to pay interest on any money they owed to either party.
“Prior to the amendment, the TAA has provided for the payment of interest as follows:
Where an overpayment is made by:
- SARS to a taxpayer – interest runs from the time the excess amount was paid by SARS (the effective date) until the date that the taxpayer has repaid SARS (Section 187(3)(g)).
- The taxpayer – interest runs from the later of the effective date or the date that the excess was received by SARS, until the date the taxpayer is refunded (Section 188(3)(a)).
At this stage, the taxpayer and SARS were on an equal footing.
The “sneaky amendment”
The TAA was updated when the proposed amendments were promulgated in January 2021.
Included in the amendments was a new insertion, Section 187(3)(h), which provides that SARS is only required to calculate interest on an overpayment after a 30-day period has elapsed – in effect giving SARS an “interest-free” window.
Taxpayers however remain liable to SARS for the interest on SARS’s overpayment from the date of payment.”
Click here to read the Moneyweb article which includes comments from a legal expert.
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