I will admit that one of my favourite times of the year is lodging my tax returns. I am always optimistic that I will get something back from the taxman. Sometimes this optimism is unfounded, but there is always a chance. Let’s, however, assume that you get that confirmation that you paid too much tax in the previous financial year and now you have a credit with SARS.
Here are the important things that you need to remember when SARS owes you a refund:
1. Like all things SARS related, a refund is a process. SARS is entitled to conduct verification, inspection and/or audit to ensure the accuracy of the refund. During such audit, SARS may withhold the refund until it concludes its audit. SARS, however, is not entitled to an indefinite time-period to conduct its audit and accordingly should finalise same within a reasonable period. SARS, however, must pay out the refund if the taxpayer tenders security that is acceptable to a senior SARS official, despite the pending audit.
2. For as long as there are outstanding taxes and returns due to SARS, it can set-off or withhold payment of the refund until the outstanding amounts are settled or outstanding returns are lodged. Taxpayers, however, should be notified of such action plan, failing which SARS’s bureaucratic avoidance may be taken up in a court of law by the aggrieved taxpayer.
3. Taking into account points 1 and 2 above, nothing detracts from a taxpayer’s right to receive a tax refund that the taxpayer is entitled to, plus interest in certain circumstances. In other words, a shortfall in cash by SARS will in no way diminish or obliterate the taxpayer’s right to receive the refund. It should, however, be remembered that a tax refund can prescribe if the taxpayer does not claim it from SARS timeously.
For more information on tax refunds, be sure to contact us.