Money Desk
SARS can chase tax debts as low as R5,000
The South African Revenue Service is intensifying debt collection efforts, targeting taxpayers with outstanding debts as low as R5,000 through third…
SARS is increasingly pursuing smaller outstanding tax debts rather than focusing enforcement only on large amounts, according to Jashwin Baijoo, partner and head of strategic engagement and compliance at Tax Consulting South Africa. He said SARS can issue a letter of final demand for debts of R5,000 and pursue further enforcement action if taxpayers fail to respond.
“This has become a massive collection drive, almost strike action, from SARS in the last 18 months,” Baijoo said during an online masterclass on tax debt and dispute resolution.
Scale of the collection drive
South Africa’s outstanding tax debt exceeds R600 billion, of which approximately R280 billion has been identified as collectable.
According to Tax Consulting South Africa’s account of the recent South African Institute of Taxation (SAIT) Tax Indaba, SARS Commissioner Johnstone Makhubu said the revenue service was targeting R126 billion in collections from recoverable tax debt.
How third-party recovery works
Under Section 179 of the Tax Administration Act, SARS can appoint a third party, including a bank or employer, to recover outstanding taxes from money held on behalf of a taxpayer. Subject to the legal requirements, this means SARS can instruct a bank to transfer money from a taxpayer’s account or require an employer to deduct money from their salary.
SARS does not need to obtain a court order for this collection mechanism. However, it must meet statutory preconditions, including delivering a final demand at least 10 business days beforehand.
Baijoo said taxpayers should act quickly after receiving a final demand. Depending on their circumstances, they can settle the amount, request a payment arrangement, dispute the assessment or apply for a compromise.
Debt compromises face high rejection
Nearly 90% of applications under an expedited debt compromise process introduced in 2025 were rejected because applicants could not demonstrate genuine financial hardship, Makhubu told the Tax Indaba, according to Tax Consulting South Africa. In some cases, bank balances indicated that applicants could afford considerably more than they had offered to pay.
