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Do you understand the consequences of a tax debt compromise?

by , 18 September 2014
According to the experts behind the Practical Tax Loose Leaf Service, a tax debt compromise is a request to SARS asking it to 'park' your outstanding tax debt, if you're in financial distress.

Whether all or only part of a tax debt is parked, will depend on your financial circumstances and how much SARS can realistically recover.

As with everything else, a tax compromise comes with consequences.

Keep reading as we tell you about the consequences of a successful and unsuccessful tax debt compromise so you'll comply with tax law.


The consequences of a tax debt compromise are as follows 


The Practical Tax Loose Leaf Service outlines the consequences of a successful tax debt compromise:
 
  • You must stick to any conditions SARS attaches to the tax debt compromise.
 
  • SARS gives you a clean slate on your tax account.
 
  • The tax debt SARS parks doesn't attract interest.
 
  • You must always be up to date with your tax affairs. If you do something wrong, SARS might withdraw the tax compromise and reinstate the tax debt for collection.
 
  • Your statement of account won't show the large tax debt due to SARS anymore. Just remember SARS has parked the debt, not written it off! It hasn't disappeared, it's still there, just hiding in the wings.
 
Now let's get to the bad news: The consequences of an unsuccessful tax debt compromise.

 
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These are the consequences of an unsuccessful tax debt compromise

 
  • SARS might immediately seek other action against you.
 
  • Your tax debt is still due in full.
 
  • You may have to go through a SARS audit.
 
 
Now that you know the consequences of a tax debt compromise, comply with tax law.
 
PS. Get the answers 65 of the most frequently asked company car and travel allowance questions right here.

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