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Malema gets a lifeline from SARS! And so can your business

by , 27 May 2014
If you've been reading the papers you'll know that Economic Freedom Fighter leader, Julius Malema, reached a settlement agreement with the taxman yesterday.

If, like many people you're thinking, this agreement shows that high profile people can get away with wrong doing, you're wrong.

A tax compromise is perfectly legal. Section 204 of the Tax Administration Act allows for it.

And the good news is it's available to you too. Continue reading to find out how a tax compromise works so you can make use of it if you owe money to SARS.


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  • Red flags you need to watch out for and the penalties you'll face if you don't respect them.
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Discover what a tax compromise is and how it works

In this article, our tax experts explain that a tax compromise is an agreement between you and SARS that allows you to repay your debt in installments.

This agreement means SARS won't come after you for outstanding taxes as long as you comply with the compromise agreement.

If you want to enter into a compromise agreement, you have to make an application to SARS. The taxman will then decide if it's appropriate to approve your application.

The Practical Tax Loose Leaf Service says once SARS agrees to compromise your claim, you must sign an agreement with SARS. This agreement sets out:

  • The amount payable in full satisfaction of the debt;
  • SARS' undertaking not to pursue recovery of the balance of the debt; and
  • All other conditions that SARS may impose, including a condition that you comply with your subsequent obligations under any Act administered by SARS.

If SARS enters into a compromise agreement with you, it's crucial that you stick to it. Here's why…


Avoid costly tax issues

Don't pay another cent on expensive tax consultant or lawyer fees.


If you fail to stick to the terms of a tax compromise agreement, SARS will pursue you and it'll have no mercy on you

In Malema's case, he has to pay what he owes SARS within a set period of time.

The Mail & Guardian reports that SARS said on Monday: 'Malema could still be sequestrated if it is found that he either failed to disclose a material fact relating to his settlement; if it is found that he gave SARS incorrect information; or if he fails to comply with any other parts of the agreement.'

So there you have it: Think of a tax compromise agreement as a second chance if you're in financial trouble. Now that you know how it works, send an application to SARS. Who knows, the taxman may just approve your application just like it did in Malema's case.

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