If a person's taxes reflect money owing to SARS and that person is a broker that needs to cash in their shares. Would SARS take the debt from his shares even if there is a suspension of payment in place?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
The law enables SARS to collect the tax debt even if it is under dispute and the taxpayer would only be able to prevent that if a suspension of debt request was made under section 164 of the Tax Administration Act. Section 164(6) the provides that during the period commencing on the day that-
-
SARS receives a request for suspension under subsection (2); or
-
a suspension is revoked under subsection (5),
and ending 10 business days after notice of SARS' decision or revocation has been issued to the taxpayer, no recovery proceedings may be taken unless SARS has a reasonable belief that there is a risk of dissipation of assets by the person concerned.
Section 179(1) allows a senior SARS official to authorise the issue of a notice to a person who holds or owes or will hold or owe any money, including a pension, salary, wage or other remuneration, for or to a taxpayer, requiring the person to pay the money to SARS in satisfaction of the taxpayer’s outstanding tax debt. This would include the amount realised on the sale of the shares and the person who sold the shares on behalf of the taxpayer.
However, SARS may only issue this notice after delivery to the tax debtor of a final demand for payment which must be delivered at the latest 10 business days before the issue of the notice, which demand must set out the recovery steps that SARS may take if the tax debt is not paid and the available debt relief mechanisms under this Act, including, in respect of recovery steps that may be taken under this section—
-
if the tax debtor is a natural person, that the tax debtor may within five business days of receiving the demand apply to SARS for a reduction of the amount to be paid to SARS, based on the basic living expenses of the tax debtor and his or her dependants; and
if the tax debtor is not a natural person, that the tax debtor may within five business days of receiving the demand apply to SARS for a reduction of the amount to be paid to SARS, based on serious financial hardship.