With the 2020 tax filing season in full swing, many taxpayers are likely to engage in dispute proceedings as their income tax assessments are issued by SARS. This will particularly be the case where errors are contained on the so-called “auto-assessments” (which in itself is a misnomer). But what happens to the disputed tax amount until the process is finalised?
Pay now, argue later
The basic premise is that even though you disagree with an amount of tax, once you have been assessed by SARS, the amount becomes due. Neither your obligation to pay the tax, nor SARS’s right to recover the tax, is suspended by any objections or appeals against the assessment or pending court proceedings (i.e. you have to pay the tax, and then dispute it).
Taxpayers do however have some remedy, in that they may request a senior SARS official to suspend the payment of the tax (or a portion thereof), pending the outcome of a dispute against an assessment. It is necessary for a taxpayer to dispute (or at least communicate their intent to dispute) the amount of tax allegedly due before a request to suspend the payment can be made.
Recently, there has been an increasing trend for SARS to issue letters of “final demand” shortly after assessments have been issued. In these cases, SARS has, for all practical purposes, commence with collection proceedings. Taxpayers should, therefore, apply for the suspension of payment as soon as they know that they will object to the amount.
How does it work?
Requests for suspension of payment is done on the eFiling system as part of the dispute section of a taxpayer’s profile. When the system prompts taxpayers for the required information required, it is important to provide as much relevant information as possible for the SARS official to consider the request. Irrelevant information (or a lack of information) merely prolongs the dispute process.
Who is responsible?
SARS will not automatically suspend the payment of a tax amount once the dispute process has commenced. Taxpayers will need to actively take steps to initiate the suspension. A request for suspension of payment is a vital part of the dispute resolution process and should be submitted as soon as possible for an assessment that a taxpayer intends to dispute.
Taxpayers should not look to abuse the suspension system as a means to buy time. Not only are SARS officials well within their rights to revoke a decision to suspend payment with immediate effect it is not in the good administration of the tax system to allow such abuses.
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 adviser for specific and detailed advice. Errors and omissions excepted (E&OE).