Part C
Permanent write off of tax debt
Category: Part C – Permanent write off of tax debt (TAA)
Section 197 (TAA) – Permanent write off of tax debt
197. Permanent write off of tax debt
(1) A senior SARS official may authorise the permanent ‘write off’ of an amount of tax debt-
(a) to the extent satisfied that the tax debt is irrecoverable at law as referred to in section 198; or
(b) if the debt is ‘compromised’ in terms of Part D.
(2) SARS must notify the ‘debtor’ in writing of the amount of tax debt ‘written off’.
Section 198 (TAA) – Tax debt irrecoverable at law
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.
Section 199 (TAA) – Procedure for writing off tax debt
199. Procedure for writing off tax debt
(1) Before deciding to ‘write off’ a tax debt, a senior SARS official must-
(a) determine whether there are any other tax debts owing to SARS by the ‘debtor’;
(b) reconcile amounts owed by and to the ‘debtor’, including penalties, interest and costs;
(c) obtain a breakdown of the tax debt and the periods to which the outstanding amounts relate; and
(d) document the history of the recovery process and the reasons for deciding to ‘write off’ the tax debt.
(2) In deciding whether to support a business rescue plan referred to in Part D of Chapter 6 of the ‘Companies Act’ or ‘compromise’ made to creditors under section 155 of the ‘Companies Act’ a senior SARS official must, in addition to considering the information as referred to in section 150 or 155 of that Act, take into account the information and aspects covered in the provisions of sections 200, 201(1), 202 and 203 with the necessary changes.