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Can SARS take money before an objection is finalised?

Monday, 30 March 2015   (0 Comments)
Posted by: Author: SARS
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Author: SARS

Q: Can SARS clean out a client’s bank account without notifying him, while an objection has not been finalized by SARS? We notified the SARS debt management department that an objection was not yet finalized and that the outcome is based on the supporting documentation supplied, which will materially affect the outstanding income tax.

A: The ‘pay now argue later’ principle applies to tax debts.

Note section 164(1) of the Tax Administration Act:

Payment of tax pending objection or appeal.—(1) Unless a senior SARS official otherwise directs in terms of subsection (3)—

(a)    the obligation to pay tax; and

(b)    the right of SARS to receive and recover tax,

will not be suspended by an objection or appeal or pending the decision of a court of law pursuant to an appeal under section 133.

In other words, SARS is entitled to the tax debt that on the ITA34 (by the due date stated therein), notwithstanding the fact that the taxpayer disputes such an amount. 

Section 164(2), however, provides the following recourse to the taxpayer:

A taxpayer may request a senior SARS official to suspend the payment of tax or a portion thereof due under an assessment if the taxpayer intends to dispute or disputes the liability to pay that tax under Chapter 9.

This is what is usually referred to as a ‘suspension of payment’ request. It can be made by writing a letter to SARS, motivating why the payment of tax should be suspended until finalisation of the dispute.  Section 164(3) lays out the factors SARS will take into account when considering whether to permit the suspension request. 

The letter can accompany the objection, and would then be forwarded internally by SARS to their collections department.

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.



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