If you need help with completing your tax return please feel free to contact us.
In practice there is no legislative period in which SARS needs to make a refund making it difficult to predict. While historically this would be within 21 days, current experience is for this to extend to 51 days or longer.
As a tax practitioner a large portion of my time is spent following up on administrative matters with SARS. The most time consuming of these tasks is following up on tax refunds on behalf of individual tax clients. I get regular calls from clients asking when they can expect their tax refunds. It is extremely frustrating as I cannot provide an adequate answer to this question. In previous years the refunds were paid out within a couple of days and in a worst case scenario you could expect your money within 21 days.
So what has changed?
Looking at the legislation, refunds are dealt with in Section 190 of the Tax Administration Act and Section 102 of the Income Tax Act. Clients are always amazed when they are told that there is no provision in these Acts that imposes an obligation on SARS to pay out refunds within a certain amount of time. Whilst SARS does have an operational target of paying refunds out within 21 days, it would be a mistake to promise a client that. It is a popular misconception that the ‘due date’ and ‘second date’ are relevant as they don’t have anything to do with the payment of a refund. (The ‘second date’ is the date on which interest will start being charged by SARS if tax owing on assessment is not paid. This interest will be charged from the ‘due date’.)
The relatively new concept of the ‘review’ has further muddied the water as it can conceivably be used to extend the refund period.
Consider the following:
Assuming your return is subject to a review, it is SARS operational policy to finalise such reviews within 30 working days. The onus is then on the taxpayer / tax practitioner to contact the SARS Call Centre if the matter has not been finalised within the 30 working days. The Call Centre operator must then escalate the matter to the appropriate supervisor and provide the taxpayer / tax practitioner with a case number. The frustrating part of this process is that the supervisor then has 21 working days to look into the matter. In most cases refunds are released within this 21 day escalation period.
Another issue that can delay the release of a refund is the status of the taxpayer’s banking details on eFiling. It the banking details are listed as ‘invalid’ they need to either be corrected on eFiling or the taxpayer would need to do this process personally at their local SARS branch. It may be advisable to check on this issue before starting the tedious follow up process.
It is imperative that the taxpayer provides the tax practitioner with all the necessary information to complete their tax return as soon as possible. This not only ensures that the practitioner can get their return in as soon as possible but it also ensures that the practitioner can upload any supporting documentation timeously and reduces the risk of a review.
With the fiscus requiring more money and SARS under increasing pressure to collect this in the form of tax it is understandable SARS are looking to sit on refunds for as long as possible. It remains to be seen whether this will become standard practice or whether a legislative change will be introduced to govern this process. I for one would like there to be certainty in terms of the refund procedure so that there exists reciprocal responsibility between SARS and the taxpayer / practitioner. What is certain though is that the current refund follow-ups take a lot of time that could certainly be better spent elsewhere.
If you need help with completing your tax return please feel free to contact us.