Understand your income tax assessments and your tax debt
Once you have submitted your income tax return to SARS, you will be issued with an ITA34 - your notice of assessment - for the relevant year of assessment.
At the top of your assessment you will be given two important dates, that are often overlooked, although these dates are of vital importance to you as a taxpayer. The dates are your “date of assessment” and your “payment due date”. Each of these dates are unique to the relevant year of assessment and are determined based on the date which the return is submitted. Now you may well ask what they mean? Well, let us unpack this for you.
The date of assessment is important to keep in consideration when deciding to object to an assessment or when wanting to request for a correction of an assessment. In terms of the Tax Administration Act, an assessment will expire after 3 years, meaning that 3 years after your date of assessment. So, three years after the date of assessment, you will no longer be allowed to object to the assessment or request for a correction on that return that gave rise to the tax assessment.
The payment due date is the final date on which you will have to pay SARS the outstanding liability in respect of the assessment. If the outstanding liability in respect of the assessment is not paid on the payment due date, interest may well start accruing one month from the payment due date.
Interest will start accruing on the first day of each month until such time that the outstanding liability in respect of that assessment is settled. This interest along with the tax liability will be reflected on your statement of account (your assessed account)
Does one’s tax debt ever prescribe?
Well Initially, in terms of the Prescription Act, a tax debt owing to SARS would previously had prescribed after 30 years. However, the Tax Administration Act that was promulgated in 2012, now states that the right by SARS to initiate the recovery of a tax debt will prescribe after 15 years of the date of assessment, thus again it is important to keep cognisance of the date of assessment when evaluating your tax situation, when the proverbial paw-paw hits the fan..
Jade Els and Willem Oberholzer are Tax advisers for Probity Advisory.