SARS R5m Limit Doesn't Affect Electronic Payments

by Jason Gorringe, Tax-News.com, London

31 December 2001

The South African Revenue Service (SARS) has announced that it will not accept cheques for amounts greater than R5m; but quickly had to back-track and say that taxpayers who file their returns and submit their payments electronically will not be affected by the decision.

From January 1 SARS will not accept cheques for more than R5m from companies and other taxpayers. This follows a decision for security reasons in April by the SA Reserve Bank and the Payments Association of SA not to accept such cheques. The Bank announced it had embarked on the implementation of risk-reduction measures in the national payment system. The risks relate to the settlement of interbank obligations and the current processes and practices in the various payment streams.

The Bank also made it clear that the electronic funds transfer debit stream would be limited to R500,000 an item, and Saswitch transactions would be limited to R10,000 an item.

The Bank's decision is expected to have an effect on how businesses settle amounts they owe SARS for VAT, PAYE (pay as you earn tax), income tax (both provisional tax and assessed tax) as well as skills development levies.

Some taxpayers have expressed concern that they may be exposed to the imposition of penalties and interest on the late payment of the respective tax if payment was not effected on due date. Dean Shacklock, a spokesman for Accenture said users who initiate payments through MyTax.co.za, one of the service providers appointed by SARS, would not be affected by any of the limits imposed by the Bank and would still enjoy the extended deadline for VAT payments.

Electronic filing payments of more than R5m would be automatically processed through a newly implemented banking routing solution from January 2. But users would have to ensure their banks could facilitate this type of transaction if they expected a tax payment to SARS to be more than R5m.

Shacklock said cheque payments would be limited to R5m. If taxpayers pay SARS by cheques and the amount exceeded R5m they would have to contact their bank or MYtax.co.za to get advice on alternative payment methods.

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