Pay now, argue later
whether the recovery of the disputed tax will be in jeopardy, or there will be a risk of dissipation of assets;
the compliance history of the taxpayer with Sars;
if fraud is prima facie involved in the origin of the dispute;
whether payment will result in irreparable hardship to the taxpayer, not justified by the prejudice to Sars, or the fiscus, if the disputed tax is not paid or recovered; or
whether the taxpayer has tendered adequate security for the payment of the disputed tax and accepting it is in the interest of Sars, or the fiscus.’’
Although the list of factors has been shortened, the inclusion of the word “including” in the opening paragraph suggests that these are not the only factors to be considered in determining whether an application for suspension of tax should be granted. All factors (including the ones listed above) and circumstances of the taxpayer should be considered.
The inclusion of “whether the recovery of the disputed tax will be in jeopardy”, in this case, a senior Sars official may be entitled to refuse an application for suspension of payment if the tax debt is in jeopardy. The collection of the tax debt is considered to be in jeopardy if there are grounds to support that the tax debt will not be collected, or there is a risk that the assets will be dissipated by the taxpayer.
The security requirement in its amended form, requires the taxpayer to tender adequate security in the suspension of tax application. This is a burdensome requirement as the taxpayer has to provide actual security in respect of the tax debt. It is likely this will be in a form of financial security placed with Sars.
An application in terms of Section 164 of the Act should encompass all factors and circumstances of a taxpayer for the suspension of payment of the tax debt. This is an important mechanism of managing the taxpayer’s financial impact arising from the tax dispute. It should also be noted that where Sars does not grant suspension of payment, the decision is not subject to objection, but can be taken on review to the high court.
Maharaj is a tax consultant at KPMG. Call him at 060 977 2533, or e-mail Keithan.maharaj@kpmg.co.za