The calculation of interest due between Taxpayers and SARS

A5The Tax Administration Act (TAA) introduces general principles to be applied when calculating interest due to or due by SARS. The aim is to create a fairer, more uniform calculation of interest for both the taxpayers and SARS. As with most things in life, there are exceptions. This article will discuss the general interest rules and some of their exceptions.

The following general concepts are laid down for the calculation of interest due between taxpayers and SARS:

  1. Interest is compensation for the lost opportunity to use money.
  2. Interest will be calculated daily on the outstanding balance and compounded monthly.
  3. Interest accrues from the effective payment date until the actual payment date of an outstanding amount. The effective payment date is the date when a tax becomes due and payable under a tax Act.

The following section explains four of the exceptions to the general concepts above:

  • Refunds due by SARS

If SARS must refund a taxpayer, interest on the refund is calculated from the date that SARS receives the excess amount which must be refunded to the date that SARS pays the refund to the taxpayer.

Where SARS sets off a refund against other tax owing by a taxpayer, the deemed date of payment of the refund is the set off date.

  • Provisional tax

In the case of the compulsory first provisional tax payment the effective date is the last business day of the sixth month after the end of the tax year. Interest will be calculated from the effective date, until the payment date or the effective date of the second provisional tax payment, whichever of the latter two comes first.

For the second provisional tax payment (also compulsory) the effective date is the last business day of the tax year. Interest is calculated from the effective payment date until the earlier of the actual payment date or the effective date (as prescribed) of the optional third provisional tax payment.

  • Delayed VAT refunds

No interest will be calculated on the refund for the period of the delay if the delay is caused by the taxpayer. The period of the delay is determined from the date that the taxpayer was required to submit information to SARS (e.g. bank details for the account into which SARS must pay the refund) until the date by which the taxpayer actually submitted the requested information.

  • Amounts refunded by mistake

If SARS refunds a taxpayer by mistake, the refund is deemed to be tax due and payable by the taxpayer. Interest will be calculated on the refund from the refund date until the date that the taxpayer pays the refund back to SARS.

A senior SARS official may remit imposed interest if he/she is satisfied that the interest was imposed as a result of circumstances beyond the taxpayer’s control. There are only three cases where circumstances might be regarded as beyond the control of the taxpayer: serious illness or accident, natural or man-made disaster, or civil disturbance or disruption of services.

The TA Act strives to provide for an equal number of days to be used for calculating any interest due between taxpayers and SARS, and to create an opportunity to apply the same rules for the calculation of interest on all the different types of tax administered by SARS.

Reference List:

Accessed on 21 June 2015:

  • l SARS Short Guide to the Tax Administration Act, 2011 (Act No. 28 of 2011), Chapter 12

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)




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IC Marais

Professional experience:

IC Marais is a certified CA (SA) with public sector and private sector technical knowledge based on 5 years’ Public Sector accounting, auditing and financial management experience and 5 years audit, tax and accounting experience. Detailed knowledge of private and public sector accounting and auditing standards (GRAP, IPSAS, IFRS, IAS, ISA) and public sector financial legislation (MFMA, etc.)

He enjoys the outdoors, hunting and fishing.


Professional experience:

In 1995, Schalk started as a trainee at Warner and Newton (which became Moores Rowland in 1997 and then Mazars Moores Rowland in 2007) in Bloemfontein. In 1998, Schalk was appointed as manager at Moores Rowland, where he became a partner in 2003. Schalk received his Postgraduate Certificate in Advanced Taxation in 2006 and in 2009 he received his Certificate in the Administration of Estates.


Professional experience:

Cedric started as a trainee at Warner and Newton (which became Moores Rowland in 1997 and Mazars Moores Rowland in 2007), Bloemfontein, in 1986. After completion of his articles, he joined the Special Investigations Division of the Department of Finance (SA Revenue Services) as a senior inspector from 1990 to 1991.


Professional experience:

Lucha started her career as a tax inspector at the Inland Revenue Department of New Zealand. After this she worked in commerce in Canada, Mexico and the United States.

On her return to South Africa, she completed her CA training contract with us and has been with Newtons ever since. She became a Partner in 2012.

Apart from her CA(SA) qualification she also holds a postgraduate certificate in Advanced Taxation (2005) and has the overall responsibility for training as our Training Officer.