Last week, the South African Revenue Services (SARS
) announced that Malema owed it R16 million.
And as Malema is unable to pay these taxes, SARS
has warned that it would seize all his properties if he fails to pay, says Crystal van Vyk on The Africa Report website
Has Malema been hiding assets to put SARS off the trail?
But the value of his assets is far below the R16 million tax
bill, write Dianne Hawker, Candice Bailey and Moloko Moloto on IOL
This is why SARS
is seeking a sequestration order, which mean SARS
suspects Malema has hidden assets
that he's been disposing of.
If Malema did make donations and is later found to be insolvent,
his creditors could be asked to repay the money.
If you find yourself in a similar boat, the worst thing to do is clear your bank accounts and start to your sell stock or hide your assets
to prevent your creditors from getting a share of proceeds of the sale.
You'd be charged with tax fraud
for intentionally cheating the tax
system, says the Tax Bulletin
Luckily, there are some assets that can't be seized if you're declared insolvent
Four asset types that won't be seized if you're declared insolvent:
1. Your personal clothing and bedding;
2. Any pension, or interest in an approved pension or other retirement fund;
3. Any remuneration for work you've done after the sequestration date; and
4. Certain 'protected' policies, such as life policies taken out on your own life if they've been active for at least three years.
If you're under investigation because SARS
suspects something fishy in your accounting, keep everything above-board or, like Maleman, you'll face further penalties and only make things harder for yourself in the long run.
Remember, becoming insolvent doesnʼt just affect you. It affects all those around you, especially those people you owe money to. If you want more information on insolvency
get your hands on The Practical Accountancy Loose Leaf
. In it we've got a dedicated chapter on insolvency
and you'll discover:
What does 'going insolvent' mean?
What happens when you go insolvent?
Step-by-step: What'll happen during the administrative process?
What happens when there're not enough assets to cover liquidation costs?
4 things you must remember about insolvency
Get your Practical Accountancy Loose Leaf here...