While the Tax Administration Act 28 of 2011 came into operation on 1 October 2012, many taxpayers are still unfamiliar with some of the provisions. Not only is this risky, it means you may be breaking the law when it comes to your tax debts and not even realising it.
In fact, according to Biz Assist, there are provisions in the Tax Administration Act 28 of 2011 that allow SARS to recover a taxpayer's tax debt from a third party who either holds money for, or owes money to, that taxpayer.
This means a senior SARS official can serve a notice on the third party requesting that the money held or owed to you be paid over to SARS. The obligation can extend to money that the third party hasn't yet received.
'The money being held for or owed to the taxpayer could include the taxpayer's pension, salary, wage or remuneration,' adds Biz Assist.
When it comes to your business, it's best that you manage your company's debtors efficiently. Especially considering that if your debt isn't recorded correctly, your debtors' balance will be incorrect. And this will affect your ability to recover your debt accurately.
Luckily, there are risk areas you can look out for to help you manage debtors more efficiently to avoid incurring costs.
Two risk areas to look out for when it comes to debtors
#1: Keep a close eye on the stragglers. This becomes more risky in times when the economy suffers. This means your clients will be affected as well and chances that they'll pay you are slim.
'It's important you have tighter controls, to ensure you have a higher chance of recovering money from your debtors. If you don't, you won't have cash to settle your creditors and you won't be able to pay your expenses as they become due,' Practical Accountancy Loose Leaf.
#2: Fraud. If your debtors pay cash especially, misappropriation is most likely to happen when your company receives money from debtors.
'Watch out for staff members who allow high credit limits to unapproved clients. This allows inventory to be sold but never paid for.
There you have it. Familiarise yourself with what the law requires so you won't fall on the wrong side of SARS.