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Revealed: Three instances when you'll be liable for someone else's tax debt

by , 27 August 2013
Are you the financial manager, bookkeeper or accountant in your company? If so, under the Tax Administration Act, you could be held personally liable for someone else's tax debt. Read on to discover the three instances when you'll be held liable and what you can do to reduce your personal liability so you don't end up in jail for someone else's mistake.

As the representative taxpayer of your company you're personally liable if SARS detects any transgressions, warns FSPBusiness.

You'll be held personally liable for another person's tax debt in these three instances

According to the Practical Vat Loose Leaf Service you'll be personally liable if you withhold tax and don't pay it over to SARS. Or, if you should've withheld tax in terms of a tax Act and you didn't and paid it over to SARS instead.

You'll be held responsible:

  1. If you need to deduct PAYE and pay it over to SARS but don't;
  2. If you submit a Vat payment and you exclude an obvious transactions like import transactions to avoid or minimise your Vat obligation; and
  3. If you exclude revenue transactions from the Income Tax return that were recorded on a separate invoice book and understate the taxable income.

Is there a way to reduce your risk of personal liability?

Yes, you can reduce your risk of liability by complying with tax laws and being honest about how you handle tax affairs as a representative taxpayer. You can also minimise your risk of liability by adopting these good business practices.

Knowing when you'll be held liable for someone's tax affairs will ensure you comply with the law to minimise your personal liability.

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