"Cash is King", so the saying goes - but not as far as the South African Revenue Service (Sars) is concerned. Starting from November 1 2009, Sars has been phasing out the acceptance of cash at its offices for the payment of tax.
While the overwhelming majority of all payments to Sars are made via electronic funds transfer, Sars e-filing, or by cheque, the number of souls that trundle into a Sars branch to make payments in cash has declined significantly. This is what has led to the decision to no longer accept cash at its offices, according to a recent Sars press release.
Citing the high costs of handling cash, which includes the provision of security as well as cash-in-transit services, Sars has indicated that it is no longer "cost-effective for Sars to accept cash at its branches".
The change was phased in, at Sars's offices in the North West, Limpopo, and Mpumalanga provinces no longer accepting cash on November 1 2009. The Free State, KwaZulu-Natal, and Western Cape offices will follow suit from February 1 2010, while Gauteng - where the highest volumes are - will be enforcing the "no-cash rule" as from April 1 2010.
Small and medium-sized businesses trying to reduce the amount of bank charges that they pay will be affected most by this change. After all, why should they bank their cash, incurring 1% or more in cash deposit fees, only to be hit again when having to make the payment to Sars? Is this not going to further add costs to an already hard-squeezed small business sector?
Thankfully, the door has not been closed on cash payments completely, as the option of making cash payments directly into Sars' bank account remains open. Sars has accounts with each of the big-four banks (Absa, First National, Nedbank, and Standard). Because Sars is the account-holder in each case, they will foot the bill for the cash deposit fees incurred.
However, when paying cash into a Sars bank account, make sure that you use the account code provided on the return or assessment (eg, Sars-ITX for income tax; Sars-VAT for value-added tax, etc). Also, the reference field (being the relevant income tax / employees' tax / VAT number) is critical - get this wrong, and you risk a late-payment penalty or even paying someone else's tax for them!
Sars has reiterated that its preferred methods of payment remain via eFiling or internet banking. Both methods provide the taxpayer as well as Sars with an immediate record of payment, have lower risks of fraud, and reduce capturing errors.
The change does not however apply to customs payment points, which will still be accepting cash. This is because customs and related duties are often paid not only in foreign currency, but also outside of normal banking hours. Obtaining a bank-guaranteed cheque to pay such duties would also not be practical.
