We have recently been made aware of a significant change from SARS that could have financial implications for taxpayers. Under the new guidelines, SARS is now reallocating unallocated credits or overpayments that are older than five years to the National Revenue Fund. This change, which could result in the permanent loss of these credits, is part of SARS’ continued efforts to streamline tax administration and collect outstanding revenue.
Why Is SARS doing this?
This move aligns with section 190(4) of the Tax Administration Act, which allows SARS to absorb credits or payments that have remained unallocated for over five years. While this action may seem like a new policy, it is essentially an enforcement of existing tax laws designed to manage taxpayer funds and prevent dormant credits from lingering in the system.
Imagine a taxpayer who has a credit on their SARS account dating back to 2018. This credit was never allocated, and the taxpayer never followed up on it. On the 11th February 2024, SARS generates a statement for this credit, and the taxpayer remains unaware. Upon reviewing their statement today, they discover the credit has been absorbed into the National Revenue Fund, meaning it is lost and cannot be reclaimed.
How to prevent losing your credit
It is critical for businesses and individuals to actively manage their accounts and ensure that any unallocated payments or credits are addressed. Here is what you can do:
- Regularly review EMPSA statements: We recommend reviewing statements frequently to ensure that credits are correctly allocated.
- Keep track of payments: If you have payments that have been pending allocation for more than five years, now is the time to take action.
- Reach out to SARS: If you suspect any issues with unallocated credits, don’t wait. Contact SARS or your tax advisor immediately for guidance.
We urge all businesses to review their SARS statements and verify the allocation of all credits, especially those dating back over five years. If any credits are unallocated, take steps to resolve them promptly to avoid losing them permanently.
For any concerns, reach out to your tax consultant or directly to SARS. If you need assistance navigating these changes, our team is here to help.