Johannesburg - The conditions under which taxpayers can be exempted from the pay now, argue later rule in tax disputes have been clarified by a legal change that took effect on February 1, the South African Revenue Service (Sars) said on Monday.
The Taxation Second Laws Amendment Act confirms the long-standing rule that disputed tax can be collected despite an objection from the taxpayer, Sars said.
It also gives guidance on which factors Sars has to consider when a taxpayer asks that payment be deferred until the dispute is decided.
These include the taxpayer's history of compliance, the risk of dissipation of assets during the suspension period and whether the taxpayer can provide adequate security for the amount claimed.
Sars will also consider whether paying the tax would result in "irreparable financial hardship" or whether the objection to paying it was "vexatious and frivolous".
The amendment also stipulates that, should the taxpayer pay the amount demanded and the dispute is later settled in his favour, Sars would pay the same interest it normally charges on outstanding debt when reimbursing the money.
At the moment, interest on outstanding debt is 9.5%.
Sars spokesperson Adrian Lackay said existing Sars decisions to suspend payment of a disputed amount will remain valid until the date stipulated in the decision or July 31, whichever was earlier.
The Taxation Second Laws Amendment Act confirms the long-standing rule that disputed tax can be collected despite an objection from the taxpayer, Sars said.
It also gives guidance on which factors Sars has to consider when a taxpayer asks that payment be deferred until the dispute is decided.
These include the taxpayer's history of compliance, the risk of dissipation of assets during the suspension period and whether the taxpayer can provide adequate security for the amount claimed.
Sars will also consider whether paying the tax would result in "irreparable financial hardship" or whether the objection to paying it was "vexatious and frivolous".
The amendment also stipulates that, should the taxpayer pay the amount demanded and the dispute is later settled in his favour, Sars would pay the same interest it normally charges on outstanding debt when reimbursing the money.
At the moment, interest on outstanding debt is 9.5%.
Sars spokesperson Adrian Lackay said existing Sars decisions to suspend payment of a disputed amount will remain valid until the date stipulated in the decision or July 31, whichever was earlier.