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Did you know that the TAA extends personal liability for tax debts to the following five third parties?

by , 14 February 2014
The Tax Admin Act (TAA) has different categories for individuals that are held responsible for other people's taxes. One of these categories is 'responsible third parties'. Under the TAA, personal liability for tax debts extends to the following people...

The TAA is serious about tax debts. I If you're considered a 'responsible third party' you're in trouble.

Here are the third parties the TAA extends personal liability to

#1: A third party holding or owing money and appointed to satisfy tax debts: This refers to a person who holds or owes or will hold or owe any money for or to a taxpayer and who's required by SARS to pay the money, but fails to do so.

This person is also known as an agent appointment.

#2: A third party involved in financial management: The Practical Vat Loose Leaf Service says this is a person who controls or is regularly involved in the management of the financial affairs of a taxpayer.

This could be a Financial Manager who was negligent or fraudulent in the payment of the tax debts of the taxpayer.

#3: Shareholders acquiring assets of a wound-up company: A shareholder who acquired assets within one year prior to the winding-up of a company without having satisfied its tax debts.

This generally happens in a scenario known as asset stripping or dividend stripping of a company by shareholders;

#4: A transferee receiving assets below market value: This refers to any person who's a connected person in relation to a taxpayer and received assets from that taxpayer without consideration or for consideration below fair market value; and

#5: A third party who assists with obstruction of tax collection: A person, who knowingly assists a taxpayer in order to obstruct the collection of tax debts, is jointly and severally liable with the taxpayer.

If SARS holds you personally liable as a third party follow these four steps.

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