1. A taxpayer is currently sequestrated. Last year she was advised by the tax office that she would need to go in and change her tax number under her new status of "sequestration". Does a taxpayer need to have a tax number prior to sequestration, during s
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
In terms of the current practice generally prevailing, with which we agree, section 25 of the Tax Administration Act, read together with section 66(13)(a)(b) of the Income Tax Act, prescribes that where the estate of a person is sequestrated, separate returns must be submitted for the periods commencing –
• on the first day of that year of assessment and ending on the date preceding the date of sequestration; and
• on the date of sequestration and ending on the last day of that year of assessment.
An insolvent estate’s first period of assessment will commence on the date of sequestration and end on the last day of February.
The principle is that the client’s status as a taxpayer changed when the sequestration order became final. She then ceased to be a taxpayer and a new tax registration number will have to be obtained when she earned taxable income (above the tax threshold) thereafter.