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Nine instances when SARS won't 'park' your tax debt

by , 14 May 2014
Are you in financial trouble and can't pay your tax to SARS? The good news is you can ask SARS to 'park' your debt. This is a tax compromise.

This is basically an agreement between you and SARS to allow you to repay your debt in installments. This means SARS won't come after you for the outstanding taxes due as long as you comply with the compromise agreement.

But, be careful, there are nine instances when SARS won't allow a tax compromise.

Read on to find out what they are so you can ensure your request for a tax compromise is valid.

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SARS won't allow a tax compromise in these nine instances

The Practical Tax Loose Leaf Service says SARS won't compromise a tax debt where:

  1. The tax debt is less than your net asset value, reckoned at market value and not cost;
  2. The compromise will prejudice other creditors (unless they've consented), or place them in an advantageous position relative to SARS;
  3. Any other creditor has communicated its intention to apply for your liquidation or sequestration;
  4. Your tax affairs aren't up-to-date (other than outstanding monies);
  5. Your only reason to support your request for compromise is your claim of hardship, including the need to sell your home or business;
  6. By agreeing to the compromise, SARS is no better off than if you were sequestrated or liquidated;
  7. It may adversely affect broader taxpayer compliance;
  8. In the case of a company or trust, any director or trustee has been involved in fraud or tax evasion or you're been involved in failed companies; and
  9. Within the period of five years immediately before the request for the compromise, you were party to an earlier agreement of compromise with SARS. Or were sequestrated or liquidated or party to a compromise with creditors under Section 311 of the Companies Act, which was sanctioned by a court.

Here's one point you need to keep in mind when it comes to a tax compromise…

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Every South African tax law explained by our experts

The Practical Tax Loose Leaf Service offers you:

  • All the definitions and legal regulations, useful advice, exceptions to the rules that help you slip through the legislative jungle of taxes.
  • Case studies and practical examples that show you what elements you should consider for your taxes to be perfect.
  • Red flags you need to watch out for and the penalties you'll face if you don't respect them.
  • Sample templates at your disposal, ready to be filled in, customised and printed.

Click here for more details

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SARS will never allow a tax compromise where it's only in your interest

You must ensure your reasons are valid when you ask for a tax compromise.



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