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What happens after SARS agrees to compromise a tax debt?

by , 02 September 2014
If you owe SARS money and you realise you're struggling to pay it, you can enter into an agreement with SARS to allow you to repay the debt in installments. This is called a 'tax debt compromise.'

It's great because it gives you some room to breathe.

And one person who's breathing a little easier thanks to a compromise agreement is Economic Freedom Fighters' leader, Julius Malema. He entered into an agreement with SARS not so long ago and is paying the millions he owes in installments.

But something that always confuses most business owners is what happens after SARS agrees to compromise a tax debt? What are the terms and conditions?

Read on to find out so you can fully comply when it comes to a tax debt compromise.


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The following happens once SARS agrees to compromise a tax debt

The Practical Tax Loose Leaf Service explains that once SARS agrees to compromise your claim, you must sign an agreement setting out:
 

  • The amount payable in full satisfaction of the debt;
 
  • The undertaking by SARS 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.
 
This is how the agreement of compromise is made effective. As long as you comply with the agreement and all its terms, SARS WON'T pursue you for the outstanding taxes due.

The important point about a tax debt compromise is you must stick to your end of the deal.

So now that you know what happens after SARS agrees to compromise a tax debt, make sure you comply.

For more information on a tax debt compromise, checkout the Practical Tax Loose Leaf Service.

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