Paragraph 2(1) of the Fourth Schedule to the Income Tax Act ("the Act") provides that an employer must pay over employees' tax within 7 days after the end of the month during which it was deducted. The Commissioner for the South African Revenue Service does, however, have the discretion to extend this period.
In view of the fact that employees' tax is collected by an employer and paid over to the State on an agency basis, it has been decided that the particular discretion may not be exercised to extend the period of payment beyond a further 7 days. This means that all payments of employees' tax in respect of which extension have been granted must be paid within 14 days after the end of the month during which the amount was deducted.
The discretion may, furthermore, only be exercised to address a fully motivated, insurmountable administrative difficulty that an employer may have. The discretion may under no circumstances be exercised to merely improve the cash flow constraints of the employer.
Interest on late payments is calculated on the basis described by section 89bis of the Act, which means that interest will be reckoned from the end of the period determined in paragraph 2(1) of the Fourth Schedule to the Act. Following the aforementioned decision, this period may not exceed 14 days.
The decision not to extend the period of payment beyond 14 days after the end of the month in which the employees' tax was deducted will be effective in respect of employees' tax payments due by employers on and after 1 March 1999. This means that the next payment of employees' tax by employers must be made on or before 7 March 1999 or, if extension was granted, not later than 14 March 1999.
ISSUED BY THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE