Section 179 of the Tax Administration Act makes provision for the Commissioner for the South African Revenue Service (SARS) to appoint a third party to withhold and pay over to SARS any amounts due by a tax debtor to settle outstanding tax debt.
A third party may be an employer or any other person who has the management, custody or control of any income (including a pension, salary, wage or other remuneration) for the taxpayer.
This is done via what is referred to as an IT88 or AA88 Notice. If the third party is unable to comply with a requirement of the notice then they must advise SARS of the reasons within the period specified in the notice, and SARS may withdraw or amend the notice as is appropriate under the circumstances. If the third party does not comply, it will be liable for the amount stipulated in the notice.
The tax debtor may approach SARS to amend the notice and extend the period to pay in order for him or her to meet basic living expenses. This can only be negotiated directly with SARS as the third party has an obligation to pay as instructed in the notice.
SARS will issue an AA88 Notice 10 business days after it has issued a final demand to the tax debtor. The letter of demand will set out the recovery steps that SARS may take if the tax debt is not paid as well as the available debt relief mechanisms under the Act. If the tax debtoris a natural person they may, within five business days of receiving the demand, apply to SARS for a reduction of the amount to be paid based on the basic living expenses of the tax debtor and the circumstances of his or her dependants.
How does this affect our investors?
If you have a living annuity with Nedgroup Investments and have an outstanding debt to SARS, you may have/or in future have an AA88 Notice issued against you. If so, we are compelled to pay out any outstanding tax to SARS in terms of the notice.
It is therefore important that if you are aware of any outstanding tax that you owe SARS, to approach SARS in order to ensure that any such notice is issued taking into consideration affordability. You will not be able to negotiate the affordability with a third party after they have been issued an AA88 Notice by SARS.
If you have any comments or queries regarding this article, please feel free to contact Nedgroup Investments Legal Services.