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How to avoid personal liability if you're a withholding agent

by , 14 February 2014
You're a withholding agent if you're responsible for withholding tax under a tax Act and you have to pay the tax over to SARS. For example, if you're an employer who withholds Pay As You Earn (PAYE) for your employees, you're seen as a withholding agent. Continue reading to find out how to avoid personal liability as a withholding agent.

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Avoid costly tax issues
Don't pay another cent on expensive tax consultant or lawyer fees

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Being a withholding agent comes with a lot of responsibility.

That's because the Tax Admin Act holds you personally liable for someone else's taxes.

The danger with this is that if you're held personally liable for someone else' tax debt and you ignore the situation, SARS can claim from investments and retirement funds paid into your bank account.

What's more…SARS will also accrue interest and penalties on the outstanding amount.

And that's why you need to do everything you can to control and maintain the situation and prove you're not liable for the tax debt.

If you're asking yourself, 'how do I do this?' don't worry, we've got you covered.

Use these five tips to avoid personal liability as a withholding agent

The Practical Tax Loose Leaf Service recommends you do the following to avoid personal liability:

#1: File all returns on time.

#2: Make sure you have all the supporting documents when you submit returns.

#3: Verify the info you submit to SARS by doing checks and balances.

For example, when you submit EMP201's (PAYE, SDL and UIF), ensure the year-to date tax deductions for your employees are correct and any differences between actual and calculated tax returns are adjusted in the necessary EMP201 submission.

#4: Make sure directors and management take responsibility for any financial information you've submitted. They must understand what you submit and how you made these calculations.

#5: Understand dividends tax and what triggers it. In addition, make sure dividends tax is withheld and paid over to SARS as soon as they become liable. You'll do this by completing and submitting the DTR form (Dividends Tax Return).

Don't forget that SARS can claim from your investments if it holds you personally liable for another person's taxes. So use these tips to avoid personal labiality.

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