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SARS may grant you or your business an instalment payment arrangement on tax payments without imposing penalties.
Taxpayers that are incapable of making tax payments due to the COVID-19 pandemic may apply to SARS to defer certain tax payments without incurring penalties.
Which tax payments qualify?
We understand that the deferral will cover tax debt that a taxpayer will not be able to pay due to the hardship experienced as a result of COVID-19 lockdown. Any ‘historical debt’ incurred prior to the lockdown will continue to be dealt with in terms of the normal deferral arrangement process and must not be dealt with using the process detailed below.
Importantly, what are the requirements?
- The applicant must be able to prove serious financial hardship which must be directly attributable to the effects of the COVID-19 pandemic; and
- The effects of the COVID-19 pandemic on the applicant must be substantial and material; and
- The applicant must prove to SARS that an instalment payment arrangement (IPA) is required because of the impact of the COVID-19 pandemic;
What benefits can an applicant expect if SARS approves an IPA request?
- The applicant will be permitted to pay off their tax liability over several instalments, granting the applicant immediate cashflow relief;
- The applicants’ tax compliance status with SARS will remain in good standing, enabling the applicant to benefit from other tax relief measures offered by SARS (which often require the applicant to be in good standing with SARS);
- If SARS approves an IPA before the relevant payment is due, SARS will not levy a late payment penalty; and
- If SARS approves an IPA request after the payment is due, SARS will consider the remittance of a late payment penalty on a case by case basis.
To which SARS email address must the request be sent to?
Importantly, what documents must an applicant include in the email request to SARS?
- A letter addressed to SARS requesting a deferred payment arrangement, stating detailed reasons for the request and the specific tax type and tax periods involved;
- The applicants’ latest annual financial statements and latest management accounts;
- A list of the applicants’ debtors and creditors; and
- A cash flow projection for the next three months.
Will SARS approve all IPA applications?
No, each application will be considered on a case-by-case basis by SARS and decided on its merits. If the application does not meet certain criteria, it will be deleted without confirmation of receipt thereof. It is advised that applicants put forward applications timeously to give SARS enough time to process same.