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CLAIMING PAYE CREDITS

TAX LAW IN ACTION – CLAIMING PAYE CREDITS

PAYE Credits and How to Claim them

We recently resolved a case involving a company claiming PAYE credits. The facts of the case are briefly that when the company filed its annual tax return, it claimed PAYE credits. The PAYE credits so claimed however was in fact PAYE paid over by the company in respect of its employees and were not PAYE credits of the company. The reason why it was claimed on the return was that the PAYE credits were prepopulated on the annual tax return – the taxpayer thought at the time that since it was pre-populated on the return, SARS wanted the taxpayer to submit the return as such.

SARS disallowed the credits and imposed an understatement penalty of roughly R2.2 million despite the fact that the PAYE credits were prepopulated on the return. SARS’ argument was based on (a) the taxpayer could not produce evidence that the PAYE credits were pre-populated on the return and (b), even if it was so pre-populated,  the taxpayer must have realised it was a mistake but nevertheless proceeded to submit the return, accepting an illegal benefit.

We ultimately won the case with SARS agreeing to remit the penalty in total. The defense was heavily based on evidence that the PAYE credits were pre-populated, why the taxpayer cannot be said to have accepted any illegal benefit and that this was a bona fide inadvertent error.

Our speciality practice area is tax dispute resolution. Our team is headed by Nico Theron (Chartered Tax Advisor (SA)), author of Lexis Nexis’ Practical Guide to Handling Tax Disputes, Chairman of the South African Institute of Tax Professionals Tax Administration Work Group, guest lecturer on tax dispute resolution at post grad level at UP and WITS, head lecturer on The Tax Faculty’s dispute resolution course and founder of Unicus Tax Academy. If you’re looking for expert tax consultants in South Africa, get in touch.

Every effort was made to ensure accurate reflection of the law and the tax principles discussed in our articles or as set out on our website at the time of publishing on the website. Tax law develops all the time and it is therefore recommended that views expressed in the past be vented by users for current applicability and accuracy.  Comments made and views expressed in our articles and on our website does not constitute advice to any person or company. Unicus Tax Specialists SA will not be liable for any loss or damage of whatever nature or form caused due to reliance on this article.

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