The calculation of interest due between taxpayers and SARS

The 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:

  • Interest is compensation for the lost opportunity to use money.
  • Interest will be calculated daily on the outstanding balance and compounded monthly.
  • 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.

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)

Reference List:

Accessed on 21 June 2015:

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

Business ethics

There is a misconception that if a business complies with all legal requirements, it also has good business ethics. However, legal compliance does not automatically equate to morally sound business practices. A member of management or an employee’s conduct may not break any laws, but it may breach the standards of business ethics.

What is business ethics?

Business ethics is a framework for acceptable moral behaviour in the workplace by both management and employees.

Benefits of good business ethics

Good business ethics create trust among colleagues as well as between employees and customers.

Companies with good business ethics are better able to attract top talent, maintain and improve their reputation and stay out of legal trouble.

Good business ethics make for happier employees and happier employees are more productive employees.

Examples of bad business ethics

Undercutting, i.e. where an organisation first drops prices to put competitors out of business and then increases prices again, is not only an example of bad business ethics but it is also illegal.

Unacceptable conduct by management and/or employees in the workplace, for example lying, stealing, sexual harassment and discrimination, erodes trust among employees and between employees and management.

Another example of bad business ethics would be using company assets or consumables for private purposes, e.g. taking office supplies home with you and justifying it to yourself with the fact that you put in some overtime earlier in the month.

Examples of good business ethics

Good business ethics practices by an employer include issues such as the overall treatment of colleagues with respect, dignity, non-discrimination, fairness, intolerance of sexual harassment, tolerance of people’s differences and diversity, and understanding and respecting conflicting points of view.

Environmental ethics apply to an organisation’s responsibility towards nature and the community and will address issues such as accountability for and prevention of pollution.

Employee ethics include, amongst others, honesty towards customers and colleagues, humility, trustworthiness, treating others with respect, commitment to the employee’s work and productivity.

The area of customer ethics may include principles such as honouring contracts, disclosure of and owning up to mistakes made by employees of the organisation and the disclosure of any flaws in a product.

Examples of financial ethics would be to uphold honest accounting practices and not inflating reimbursive travel claims.

Training

The identification of business ethics goals and the training of employees on these goals is a requirement in creating a culture of good business ethics and trust in the organisation, as well as between the organisation and clients or suppliers. Providing ethics training teaches employees sensitivity to ethical issues and how to resolve difficult moral situations on their own within the organisation’s ethics guidelines.

Changes in technology and working environments constantly raise new ethics issues. Ethics training should be reviewed from time to time to ensure that the organisation’s ethics policy remains up to date with current circumstances and issues in the working environment.

Enforcement

An effective type of enforcement of business ethics is a whistle-blower system which allows an employee to anonymously inform management of unethical behaviour which comes under the employee’s attention. Employees often fear retaliation when they bring cases of unethical behaviour under attention of management; with this system employees have the option of remaining anonymous.

You will know that you are guilty of bad work ethics when you start making excuses for your behaviour and justifying your behaviour to convince yourself that your actions are not really that unacceptable.

Senior management as well as lower-ranking employees must be equally committed to moral standards in order to create a culture where good business ethics is the norm rather than the exception.

If you would like more information  about business ethics, please contact your financial adviser.

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)

Reference list:

Nwanda internal news

1. 2015 Examination results:

Congratulations Johan Du Plessis for passing CTA level 1, Professor Mafela and Brett Beetge for successfully completing CTA.
Congratulations to Nhlanhla Ngwasha, Nikki Padarath, Sadiya Mansoor, Aasimah Khan and Siphokazi Kubheka for obtaining their BCompt(Acc) Degree.

2. SAICA Board Examination:

We early await with Brett Beetge and Professor Mafela their SAICA Board I results in March 2016.

3. Congratulations for completing of articles:

Raaesah Shaik, Jamie-Lee Pietens, Rukudzo Chikonye, Nikki Padarath and Siphokazi Kubheka.

4. Awesome Rewards:

  • Passing CTA
    – Johan du Plessis, Brett Beetge and Professor Mafela
  • Obtained degrees
    -Aasimah Khan
    -Nikki Padarath
    -Sadiya Mansoor
    -Nhlanhla Ngwasha
    -Siphokazi Kubheka
  •  Obtained distinctions and passed all subjects
    -Andre Strydom
    -Hennie de Beer
    -Nelisiwe Mahlangu

5. Welcome to our new Trainees:

1. Ntshepeng Tshotetsi
2. Sean Tendai Bushe
3. Pule Malete
4. William Harris
5. Rafeeah Razak
6. Amaan Ganie
7. Caroline Koto
8. Sikhanyile Noholoza
9.Thubelihle Keisha Sibiya
10. Tshepiso Martins
11. Razeen van Rooyen

6. Farewell to a staff member:

We say farewell to Natascia Correia at the end of January 2016 and wish her success in her new career.