200. Compromise of tax debt
A senior SARS official may authorise the ‘compromise’ of a portion of a tax debt upon request by a ‘debtor’, which complies with the requirements of section 201, if-
(a) the purpose of the ‘compromise’ is to secure the highest net return from the recovery of the tax debt; and
(b) the ‘compromise’ is consistent with considerations of good management of the tax system and administrative efficiency.
‘remittance request’ means a request for remittance of a ‘penalty’ submitted in accordance with section 215.
220. Objection and appeal against decision not to remit penalty
A decision by SARS not to remit a ‘penalty’ in whole or in part is subject to objection and appeal under Chapter 9.
226. Qualification of person subject to audit or investigation for voluntary disclosure
(1) A person may apply, whether in a personal, representative, withholding or other capacity, for voluntary disclosure relief.
(2) If the person seeking relief has been given notice of the commencement of an audit or criminal investigation into the affairs of the person, which has not been concluded and is related to the disclosed ‘default’, the disclosure of the ‘default’ is regarded as not being voluntary for purposes of section 227, unless a senior SARS official is of the view, having regard to the circumstances and ambit of the audit or investigation, that-
(a) ……….
(b) the ‘default’ in respect of which the person has sought relief would not otherwise have been detected during the audit or investigation; and
(c) the application would be in the interest of good management of the tax system and the best use of SARS’ resources.
(3) A person is deemed to have been notified of an audit or criminal investigation, if-
(a) a representative of the person;
(b) an officer, shareholder or member of the person, if the person is a company;
(c) a partner in partnership with the person;
(d) a trustee or beneficiary of the person, if the person is a trust; or
(e) a person acting for or on behalf of or as an agent or fiduciary of the person,
has been given notice of the audit or investigation.
[Section 226 amended by section 65 of Act 23 of 2015 and substituted by section 63 of Act 16 of 2016 effective on 19 January 2017]
201. Request by debtor for compromise of tax debt
(1) A request by a ‘debtor’ for a tax debt to be ‘compromised’ must be signed by the ‘debtor’ and be supported by a detailed statement setting out-
(a) the assets and liabilities of the ‘debtor’ reflecting their current fair market value;
(b) the amounts received by or accrued to, and expenditure incurred by, the ‘debtor’ during the 12 months immediately preceding the request;
(c) the assets which have been disposed of in the preceding three years, or such longer period as a senior SARS official deems appropriate, together with their value, the consideration received or accrued, the identity of the person who acquired the assets and the relationship between the ‘debtor’ and the person who acquired the assets, if any;
(d) the ‘debtor’s’ future interests in any assets, whether certain or contingent or subject to the exercise of a discretionary power by another person;
(e) the assets over which the ‘debtor’, either alone or with other persons, has a direct or indirect power of appointment or disposal, whether as trustee or otherwise;
(f) details of any connected person in relation to that ‘debtor’;
(g) the ‘debtor’s’ present sources and level of income and the anticipated sources and level of income for the next three years, with an outline of the ‘debtor’s’ financial plans for the future; and
(h) the ‘debtor’s’ reasons for seeking a ‘compromise’.
(2) The request must be accompanied by the evidence supporting the ‘debtor’s’ claims for not being able to make payment of the full amount of the tax debt.
(3) The ‘debtor’ must warrant that the information provided in the application is accurate and complete.
(4) A senior SARS official may require that the application be supplemented by such further information as may be required.
209. Purpose of Chapter
The purpose of this Chapter is to ensure-
(a) the widest possible compliance with the provisions of a tax Act and the effective administration of tax Acts; and
(b) that an ‘administrative non-compliance penalty’ is imposed impartially, consistently, and proportionately to the seriousness and duration of the non-compliance.
CHAPTER 16
UNDERSTATEMENT PENALTY
227. Requirements for valid voluntary disclosure
The requirements for a valid voluntary disclosure are that the disclosure must-
(a) be voluntary;
(b) involve a “default” which has not occurred within five years of the disclosure of a similar “default” by the applicant or a person referred to in section 226(3);
[Paragraph (b) substituted by section 66 of Act 23 of 2015 effective on 8 January 2016]
(c) be full and complete in all material respects;
(d) involve a behaviour referred to in column 2 of the understatement penalty percentage table in section 223;
[Paragraph (d) substituted by section 66 of Act 23 of 2015 effective on 8 January 2016]
(e) not result in a refund due by SARS; and
(f) be made in the prescribed form and manner.
202. Consideration of request to compromise tax debt
(1) In considering a request for a ‘compromise’, a senior SARS official must have regard to the extent that the ‘compromise’ may result in-
(a) savings in the costs of collection;
(b) collection at an earlier date than would otherwise be the case without the ‘compromise’;
(c) collection of a greater amount than would otherwise have been recovered; or
(d) the abandonment by the ‘debtor’ of some claim or right, which has a monetary value, arising under a tax Act, including existing or future tax benefits, such as carryovers of losses, deductions, credits and rebates.
(2) In determining the position without the ‘compromise’, a senior SARS official must have regard to-
(a) the value of the ‘debtor’s’ present assets;
(b) future prospects of the ‘debtor’, including arrangements which have been implemented or are proposed which may have the effect of diverting income or assets that may otherwise accrue to or be acquired by the ‘debtor’ or a connected person in relation to the ‘debtor’;
(c) past transactions of the ‘debtor’; and
(d) the position of any connected person in relation to the ‘debtor’.
Part B
Fixed amount penalties