Interest on outstanding taxes - calculated on total including or excluding penalty?

[J7J]

Hi all,

I phoned SARS today with a query regarding the interest and penalty that should be paid on a late payment of EMP201 taxes (PAYE, UIF, SDL).

I always calculated the interest on the total outstanding including the penalty (ie. if the PAYE/UIF/SDL was R500, penalty of R50 and then interest calculated on R550). The person that I spoke to at SARS said that interest should be calculated on the amount excluding the penalty (ie. R500 for my example).

Which is the correct method?

[Dave A]

Interest is raised on the capital amount only - in your example the R500.00