Page 388 - SAIT Compendium 2016 Volume2

IN 27
Income Tax acT: InTeRPReTaTIon noTes IN 27
3.2.6
3.2.7
(b) disposes of or parts with any fund or money belonging to the employer whom he or she represents which is in his or her possession or comes to him or her after the employees’ tax, additional tax, penalty or interest has become payable, if such employees’ tax, additional tax, penalty or interest could legally have been paid from or out of such fund or money.
(2C) Where an employer is a company, every shareholder and director who controls or is regularly involved in the management of the company’s overall nancial affairs shall be personally liable for the employees’ tax, additional tax, penalty or interest for which the company is liable.
(2D) Notwithstanding subparagraph (2), the employees’ tax, additional tax, penalty or interest for which any representative employer or other person is liable in terms of subparagraph (2B) or (2C) shall be fully recoverable by the Commissioner from that representative employer or other person to the extent that it remains unpaid by the employer.’
The recovery provision – paragraph 31 of the Fourth Schedule
The offences – paragraphs 30 (1) (a), (b) and 30 (2)
‘31. Any amount of employee’s tax, provisional tax, penalty or additional tax payable in terms of this Schedule, and any amount of interest payable in terms of section eighty-nine bis of this Act shall when it becomes due or is payable be a debt due to the State and may be recovered by the Commissioner in the manner prescribed in section ninety-one for the recovery of tax and interest due or payable under this Act.’
‘30.(1) Any person who—
(a) makes or becomes liable to make any payment of remuneration and who fails to deduct or withhold
therefrom any amount of employees’ tax or to pay such amount to the Commissioner as and when
required by paragraph 2; or
(b) uses or applies any amount deducted or withheld by him by way of employees’ tax for purposes
other than the payment of such amount to the Commissioner; shall be guilty of an offence and liable
on conviction to a ne or to imprisonment for a period not exceeding 12 months.
(2) For the purposes of item (b) of subparagraph (1) an amount which has been deducted or withheld by any person from remuneration shall until the contrary is proved be deemed to have been used or applied by such person for purposes other than the payment of such amount to the Commissioner if such
amount is not paid to the Commissioner within the period allowed for payment under paragraph 2.’
4. Application of the law
4.1 Employer
4.1.1 Liability to deduct and pay over to SARS
Any resident employer (or representative employer in the case of a non-resident employer) who pays or becomes liable to pay remuneration to an employee is liable to —
• deduct or withhold employees’ tax from remuneration; and
• pay the employees’ tax to SARS within the prescribed period.*
4.1.2 Personal liability – failure to deduct
An employer who fails to deduct or withhold the correct amount of employees’ tax incurs a personal liability for the payment to SARS of the amount which it failed to deduct or pay over.†
4.1.3 Personal liability – failure to pay over to SARS
• Any amount of employees’ tax that is required to be deducted or withheld is a debt due to the State
and the employer is absolutely liable for the payment thereof to the State.‡
• The personal liability of an employer who pays remuneration —
- in a duciary capacity; or
- as a trustee of an insolvent estate; or
- as an executor; or
- as an administrator of a bene t fund, pension fund, provident fund, retirement annuity fund or
any other fund,
is generally limited to the extent of assets belonging to the entity it represented or administered.
However, where such an employer —
- alienates, charges or disposes of any money received or accrued in respect of which the tax is
chargeable; or
- disposes of any fund or amount of money belonging to the represented employer which is in its
possession or comes to him or her after the tax has become payable and if such tax could legally have
been paid from or out of such fund or money,
that employer shall be personally liable for the payment of employees’ tax, additional tax, penalty or interest to SARS§, and SARS may recover the outstanding amounts from that employer¶.
* Paragraph 2(1) of the Fourth Schedule
† Paragraph 5(1) of the Fourth Schedule
‡ Paragraph 4 of the Fourth Schedule
§ Paragraph 16(2B) of the Fourth Schedule ¶ Paragraph 31 of the Fourth Schedule
380 saIT comPendIum oF Tax LegIsLaTIon VoLume 2