Tax season has a bad rap. It is often recognised as a stressful, obligatory time that rears its ugly head once a year. But, up until that point, we don’t properly educate ourselves on the subject and the details.
As a result, individuals and small businesses are often unaware of the requirements for a tax refund to be facilitated. This leaves the power with SARS, who will more often than not delay paying out what is owed to taxpayers.
Here are the requirements taxpayers need to be aware of, and the Tax Ombud’s report on the investigation into alleged delayed payment of refunds as a systematic and emerging issue in terms of section 16 (1) (b) of The Tax Administration Act No. 28 of 20188 (TAA).
The Nitty Gritty – What Every Taxpayer Needs to Know:
- Your tax refund needs to be claimed within 5 years from date of submission of the return.
- As a taxpayer, you need to ensure that you verify your banking details with SARS and that there are no outstanding returns, in order for your refund to be paid without delay.
- If your refund is less than R100, it will be carried over to the next tax period.
- SARS has a right to withhold refunding you as per section 190 (2) of TAA: “SARS need not authorise a refund as referred to in subsection (1) until such time that a verification, inspection or audit of the refund in accordance with Chapter 5 has been finalised.”
- Authorisation of a refund payment is done once SARS is satisfied with the acceptable security provided by the taxpayer in terms of section 190 (3) of TAA: “SARS must authorise the payment of a refund before the finalisation of the verification, inspection or audit if security in a form acceptable to a senior SARS official is provided by the taxpayer.”
- If SARS makes the decision not to refund you, you have the right to appeal in terms of section 190 (6) of TAA.
- You can keep track of the status of your return refund on the Refund Dashboard found on efiling under ‘Returns History’.
- Once verification/audit is finalised, interest will start accruing from 21 business days.
Tax Ombud’s Report
The Tax Ombud’s report identified various mechanisms used by SARS to defer or delay the payment of refunds due:
- SARS failing to link submitted supporting documents at a SARS branch to the main file.
- Using the filing of new funds as an excuse to block refunds. The system blocks already verified refunds the moment a subsequent return is submitted by the taxpayer.
- The use of historic returns suddenly reflecting as outstanding, whereas these have never been shown as outstanding on the Tax Clearance Certificate / Statement of Account.
- Unnecessarily requesting more information during the audit to delay the process and, in return, delaying the interest accruing time frame.
- Withholding refunds for one tax season while an audit is in progress for another.
- Obstacles regarding diesel refunds.
- The raising of credits on accounts. In doing so, SARS created fictitious tax liabilities.
- Raising assessments prematurely, before the 21 days to submit the supporting documents.