The importance of a tax clearance certificate for most businesses cannot be overstated. It often happens though that SARS raises an assessment giving rise to an unexpected tax liability that affects the business’ tax standing. This, in turn, almost always adversely affects the business. Simply paying the extra tax assessed to ensure the business is in good standing again is not always an option, especially if the taxpayer intends disputing the underlying assessment.
Where a taxpayer intends disputing the assessment, the taxpayer can request SARS to suspend the payment of the tax liability pending the outcome of the dispute. As the law reads at the time of publishing this article, making a request for suspension of payment would not secure a tax clearance. It is only when SARS approves the request that a clearance certificate can once again be obtained despite the outstanding liability. The time between submitting the request and SARS making a decision to approve the request (which can be weeks) is often time a business doesn’t have, especially if a tax clearance is needed immediately.
The 2019 Tax Administration Laws Amendment Bill (2019 TALAB) published on 30 October 2019 proposes a change that will address this problem. In term of the 2019 TALAB, SARS may not decline a request for a clearance if there is an outstanding tax debt which SARS may not recover in terms of section 164(6) of the Tax Administration Act, No. 28 of 2011.
Section 164(6) states, subject to certain exceptions, that from the date of submission of a request to SARS to suspend the payment of the liability and up until 10 days after SARS has reverted with their decision (whether that decision is to allow or disallow the request), SARS may not take any collection steps against the taxpayer. It follows then that the mere submission of a request for suspension will, at least from the date of promulgation of the 2019 TALAB and if promulgated in its current form, be sufficient to secure a tax clearance, even if only for the period from date of submission of the request and 10 days after SARS’ decision. Of course, if SARS allows the request, the good standing status will be maintained.
At Unicus Tax we often deal with tax disputes for businesses and in our experience, this is a change that most businesses will welcome and which will bring much relief for taxpayers in a dispute with SARS.