Are you aware of the new method for making your tax payments?

One of the more efficient government institutions is the South African Revenue Services (SARS). Every year they increase collections and implement new systems to simplify tax compliance. At the beginning of September 2013 SARS also changed the way in which they collect taxes.

Previously, the most convenient way for making payment was to complete and submit your return using the SARS e-filing website.  You could then create a payment based on the information submitted.

Two options for making the payment were available – Credit Push and Debit Pull, the easiest option.  Here the tax payer or tax practitioner would set up the banking details on e-filing and create a debit order instruction against the tax payer’s bank account which pulled the money directly from the account.

Although this is the easiest method of payment, there is the risk of making unauthorised payments to SARS. Tax payers have also been concerned about the perceived access SARS has to their bank accounts. They feared that SARS would just take money from their accounts without them being aware of it. What could also happen was that a tax practitioner could make a payment from the client’s bank account without the tax payer being aware of the payment.

As from September, only Credit Push payments will be possible from e-filing. With Credit Push payments, the return is still completed and submitted. The payment instruction is then created in the same way as previously, but it is sent to the tax payer’s internet banking service provider. The payment then needs to be authorised, like a normal EFT payment, before being effected from the internet banking site.

This change leaves some questions to be answered.  As the payment is only effected once the tax payer authorises the payment in the internet banking site, what is the effective date for this payment?  Will there be a delay in the reflection of the date of the payment on the tax account?  This could lead to penalties and interest for late payment.

We anticipate that using Credit Push payments will not cause delays.  However, there is cause for concern in that some banks are having problems in processing Credit Push payments. In such cases, the only alternative is to make either a normal EFT payment or a cash payment to SARS.  With payments made in this way, a delay in the recording of the payment is very possible. This means that while the payment may have been made on time, the payment may only be processed the next day and will reflect as being late.

These changes in the way in which SARS collects taxes may catch some tax payers unaware. There will be no leniency for late payment, so make sure that you are prepared to comply.  A good tax practitioner can assist you to be tax compliant.