Category: Chapter 14 – Write off or compromise of tax debts (TAA)

Section 198 (TAA) – Tax debt irrecoverable at law

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198.    Tax debt irrecoverable at law

 

(1)     A tax debt is irrecoverable at law if-

 

(a)     it cannot be recovered by action and judgment of a court; or

 

(b)     it is owed by a ‘debtor’ that is in liquidation or sequestration and it represents the balance outstanding after notice is given by the liquidator or trustee that no further dividend is to be paid or a final dividend has been paid to the creditors of the estate; or

 

(c)     it is owed by a ‘debtor’ that is subject to a business rescue plan referred to in Part D of Chapter 6 of the ‘Companies Act’, to the extent that it is not enforceable in terms of section 154 of that Act.

 

(2)     A tax debt is not irrecoverable at law if SARS has not first explored action against or recovery from the assets of the persons who may be liable for the debt under Part D of Chapter 11.

“Compromise” definition of section 192 of TAA

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‘compromise’ means an agreement entered into between SARS and a ‘debtor’ in respect of a tax debt in terms of which-

 

(a)     the ‘debtor’ undertakes to pay an amount which is less than the full amount of the tax debt due by that ‘debtor’ in full satisfaction of the tax debt; and

 

(b)     SARS undertakes to permanently ‘write off’ the remaining portion of the tax debt on the condition that the ‘debtor’ complies with the undertaking referred to in paragraph (a) and any further conditions as may be imposed by SARS;

Section 193 (TAA) – Purpose of Chapter

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193.    Purpose of Chapter

 

(1)     As a general rule, it is the duty of SARS to assess and collect all tax debts according to a tax Act and not to forgo any tax debts.

 

(2)     SARS may, when required by circumstances, deviate from the strictness and rigidity of the general rule referred to in subsection (1) if it would be to the best advantage of the State.

 

(3)     The purpose of this Chapter is to prescribe the circumstances under which SARS may deviate from the general rule and take a decision to ‘write off’ a tax debt or not to pursue its collection.