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Company at risk, is tax write off an option?

Feb 24 2016 07:59

A Fin24 user at risk of losing his company wants to know how to go about having his tax written off.  He writes:

"I am on the brink of losing my company. I need to pay SARS R110 000. How can I go about applying for a tax write off. I do not have that kind of money. My book keeper handed me over and does not want to assist me."

Piet Nel, SA Institute of Tax Professionals responds:

We don’t have enough information and the guidance will be general in nature.  In particular we don’t know how the tax debt (the R100 000) arose. We accept it is a debt owed by the company.    

If it relates to tax due under an assessment that the taxpayer intends to dispute or disputes the liability to pay that tax you may request a senior SARS official to suspend the payment of tax or a portion thereof.

If the tax debt is not disputed a senior SARS official may enter into an agreement with the taxpayer in the prescribed form under which the taxpayer is allowed to pay a tax debt in one sum or in instalments, within the agreed period if satisfied that criteria or risks have been duly taken into consideration.  

Chapter 14 of the Tax Administration Act prescribes the circumstances under which SARS may deviate from the general rule (not to forgo any tax debts) and take a decision to 'write off' a tax debt or not to pursue its collection.  This is quite a complex part of the Act and you are well advised to consult an attorney or tax specialist in this regard. 

It is then important to note that this applies only in respect of a tax debt owed by a debtor if the liability to pay the tax debt is not disputed by the debtor. 

A senior SARS official may then decide to temporarily 'write off' an amount of tax debt if satisfied that the tax debt is uneconomical to pursue or a senior SARS official may authorise the permanent 'write off' of an amount of tax debt to the extent satisfied that the tax debt is irrecoverable at law or if the debt is 'compromised'.  

You will notice that a senior SARS official must be involved in each of the above mentioned.  It may therefore be make an appointment with a SARS official (the branch manager at the SARS office where the taxpayer’s file is) to discuss the matter with them.  

* Have a question? Send it to us and we will find an expert to answer.

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