17 September 2020
Tax & Exchange
It has been widely reported that South Africa faces a significant projected tax revenue shortfall for the 2020/2021 financial year, due to the COVID-19 pandemic and the concomitant lockdown. In light of this, taxpayers should appreciate that there is increased pressure on the South African Revenue Service (SARS) to collect outstanding tax debts. Under the Tax Administration Act 28 of 2011 (TAA), SARS is entitled to collect outstanding tax debt in different ways. One of its powers, is to instruct a third party to pay an amount owing by a third party to a taxpayer to SARS instead, in satisfaction of the taxpayer’s tax debt. Prior to issuing such a notice to a third party, SARS must follow the process laid down in section 179 of the TAA, failing which the lawfulness of the third party notice and the collection of tax through this mechanism, can be challenged.