Category: Tax Administration Act No. 28 of 2011

Section 195 (TAA) – Temporary write off of tax debt

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195.    Temporary write off of tax debt

 

(1)     A senior SARS official may decide to temporarily ‘write off’ an amount of tax debt if satisfied that the tax debt is uneconomical to pursue as described in section 196 at that time.

[Subsection (1) substituted by section 55 of Act 44 of 2014 and by section 29 of Act 43 of 2024]

 

(2)     A decision by the senior SARS official to temporarily ‘write off’ an amount of tax debt does not absolve the ‘debtor’ from the liability for that tax debt.

 

(3)     A senior SARS official may at any time withdraw the decision to temporarily ‘write off’ a tax debt if satisfied that the tax debt is no longer uneconomical to pursue as referred to in section 196 and that the decision to temporarily ‘write off’ would jeopardise the general tax collection effort.

Section 188 (TAA) – Period over which interest accrues

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188.    Period over which interest accrues

(1)     Unless otherwise provided in a tax Act, interest payable under section 187 is imposed for the period from the effective date of the tax to the date the tax is paid.

(2)     Interest payable in respect of the-

(a)     first payment of provisional tax, is imposed from the effective date for the first payment of provisional tax until the earlier of the date on which the payment is made or the effective date for the second payment of provisional tax;

[Paragraph (a) amended by section 32(a) of Act 24 of 2020]

(b)     second payment of provisional tax, is imposed from the effective date for the second payment of provisional tax until the earlier of the date on which the payment is made or the effective date for income tax for the relevant year of assessment;

[Paragraph (b) amended by section 32(b) of Act 24 of 2020]

(c)     the first payment under section 5(1) or 5A of the Mineral and Petroleum Resources Royalty (Administration) Act 2008 (Act 29 of 2008), is imposed from the effective date for the first payment until the earlier of the date on which the payment is made or the effective date for the second payment under section 5(2) or 5A of that Act for the relevant year of assessment; and

[Paragraph (c) added by section 32(c) of Act 24 of 2020]

(d)     the second payment under section 5(2) or 5A of the Mineral and Petroleum Resources Royalty (Administration) Act 2008 (Act 29 of 2008), is imposed from the effective date for the second payment until the earlier of the date on which the payment is made or the effective date for mineral and petroleum resources royalty under section 6(2) of that Act for the relevant year of assessment.

[Paragraph (d) added by section 32(c) of Act 24 of 2020]

(3)     Unless otherwise provided under a tax Act-

(a)     interest on an amount refundable under section 190 is calculated from the later of the effective date or the date that the excess was received by SARS to the date the refunded tax is paid; and

(b)     for this purpose, if a refund is offset against a liability of the taxpayer under section 191, the date on which the offset is effected is considered to be the date of payment of the refund.

Section 196 (TAA) – Tax debt uneconomical to pursue

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196.    Tax debt uneconomical to pursue

 

(1)     A tax debt is uneconomical to pursue if a senior SARS official is satisfied that the total cost of recovery of that tax debt will in all likelihood exceed the anticipated amount to be recovered in respect of the outstanding tax debt.

 

(2)     In determining whether the cost of recovery is likely to exceed the anticipated amount to be recovered as referred to in subsection (1), a senior SARS official must have regard to-

 

(a)     the amount of the tax debt;

 

(b)     the length of time that the tax debt has been outstanding;

 

(c)     the steps taken to date to recover the tax debt and the costs involved in those steps, including steps taken to locate or trace the ‘debtor’;

 

(d)     the likely costs of continuing action to recover the tax debt and the anticipated return from that action, including the likely recovery of costs that may be awarded to SARS;

 

(e)     the financial position of the ‘debtor’, including that ‘debtor’s’ assets and liabilities, cash flow, and possible future income streams; and

 

(f)      any other information available with regard to the recoverability of the tax debt.

Section 166 (TAA) – Allocation of payments

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166.    Allocation of payments

 

(1)     Despite anything to the contrary contained in a tax Act, SARS may allocate any payment made in terms of a tax Act against an amount of penalty or interest or the oldest amount of an outstanding tax debt at the time of the payment, other than amounts-

 

(a)     for which payment has been suspended under this Act; or

 

(b)     that are payable in terms of an instalment payment agreement under section 167.

 

(2)     SARS may apply the first-in-first-out principle described in subsection (1) in respect of a specific tax type or a group of tax types in the manner that may be prescribed by the Commissioner by public notice.

 

(3)     In the event that a payment in subsection (1) is insufficient to extinguish all tax debts of the same age, the amount of the payment may be allocated among these tax debts in the manner prescribed by the Commissioner by public notice.

 

(4)     The age of a tax debt for purposes of subsection (1) is determined according to the duration from the date the debt became payable in terms of the applicable Act.

Section 177 (TAA) – Institution of sequestration, liquidation or winding-up proceedings

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177.    Institution of sequestration, liquidation or winding-up proceedings

(1)     A senior SARS official may authorise the institution of proceedings for the sequestration, liquidation or winding-up of a person for an outstanding tax debt.

[Subsection (1) substituted by section 65 of Act 39 of 2013 effective on 1 October 2012 and section 56 of Act 23 of 2015 effective on 8 January 2016]

(2)     SARS may institute the proceedings whether or not the person-

(a)     is present in the Republic; or

(b)     has assets in the Republic.

(3)     If the tax debt is subject to an objection or appeal under Chapter 9 or a further appeal against a decision by the tax court under section 129, the proceedings may only be instituted with leave of the court before which the proceedings are brought.

Section 189 (TAA) – Rate at which interest is charged

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189.    Rate at which interest is charged

(1)     The rate at which interest is payable under section 187 is the prescribed rate.

(2)     In the case of interest payable with respect to refunds on assessment of provisional tax and employees’ tax for purposes of final assessment of income tax or of mineral and petroleum resources royalty paid for the relevant year of assessment, the rate payable by SARS is four percentage points below the prescribed rate.

[Subsection (2) substituted by section 33 of Act 24 of 2020]

(3)     The prescribed rate is the interest rate that the Minister may from time to time fix by notice in the Gazette under section 80(1)(b) of the Public Finance Management Act, 1999 (Act No. 1 of 1999).

(4)     If the Minister fixes a different interest rate referred to in subsection (3) the new rate comes into operation on the first day of the second month following the month in which the new rate becomes effective for purposes of the Public Finance Management Act, 1999.

(5)     If interest is payable under this Chapter and the rate at which the interest is payable has with effect from any date been altered, and the interest is payable in respect of any period or portion thereof which commenced before the said date, the interest to be determined in respect of-

(a)     the period or portion thereof which ended immediately before the said date; or

(b)     the portion of the period which was completed before the said date,

must be calculated as if the rate had not been altered.