Print Page   |   Report Abuse
News & Press: Opinion

A preservation order is not of itself a ‘tax collection’ measure

10 April 2015   (0 Comments)
Posted by: Author: PwC South Africa
Share |

Author: PwC South Africa

A preservation order is not of itself a ‘tax collection’ measure – but it may well be followed by tax collection processes 

On 1 December 2014 the Pretoria High Court confirmed a provisional preservation order that had been granted in terms of section 163 of the Tax Administration Act 28 of 2011 against Africa Cash and Carry (Pty) Ltd and various members of the Hathurani family in their personal capacities and in their representative capacities as trustees of trusts. (The judgment – thus far published only on the SARS website – is reported as Commissioner for the South African Revenue Services, as applicant, and 19 respondents, including trustees of the Edrees Hathurani Family Trust; case 49274/2014.) 

A preservation order is not a tax collection measure 

The only point of law of interest to emerge from the judgment is the affirmation by Phatudi J (at paras [16] and [19] of the judgment) that a preservation order in terms of s 163 of the Tax Administration Act –

is not a tax collection step but a mere preservation of assets that can be realized at a later stage . . . All that [SARS] needs to establish is prima facie that the respondent will or is likely to dissipate assets with the intention of defeating [SARS’s] claim.

Thus stated, a preservation order sounds innocuous. 

A fast-track judgment secured by SARS can be executed against the preserved assets 

The sting (as is clear from the judgment of the Pretoria High Court on 1 April 2011 in Hathurani v Commissioner for the South African Revenue Service [2011] ZAGPPHC 43 – it is not clear whether this was an earlier phase in the same litigation as that referred to above) derives from the fact that SARS can, separately, take a fast-track ‘judgment’ against the taxpayer by filing a certification of the amount of tax due with the clerk or registrar of the court in terms of section 172 of the Tax Administration Act. 

In that event, the assessed tax, even if disputed by the filing of an objection, is forthwith due and payable – unless the taxpayer applies to SARS for the payment of the disputed tax to be suspended while the dispute is ongoing, and unless SARS agrees to that request – and in this particular case, SARS refused to suspend payment.

There seems to be no impediment, once SARS has obtained such a judgment, to its issuing a writ of execution against the property and funds in respect of which a preservation order has been granted.

Thus, although the preservation order is not of itself a ‘tax collection measure’, it has the effect of preserving the taxpayer’s assets so that a fast-track judgment, taken by SARS, can be executed against those assets and payment of at least some of the assessed tax thereby secured by the sale in execution of those assets.

This article first appeared on


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

Membership Management Software Powered by®  ::  Legal