TAX ADMINISTRATION ACT
Yes, SARS can hold you personally liable for certain taxes under the Tax Administration Act, but they don’t!
For the last 15 years and after hundreds and hundreds of liquidations, SARS has not taken legal action against any of our clients in their personal capacities. We don’t know why, but we guess the reason is that they usually write off the debt as soon as there is a liquidation.
A liquidation dissolves the business so no debt remains to be collected. SARS closes their file as soon as there is a liquidation.
The only SARS debt that a liquidation does not write off, is taxes due in terms of the Customs and Excise Act as those taxes cling to the manager of the business and not to the business.
The Tax Administration Act (Act 28 of 2011) (“the TAA”) states that the directors/members as well as their internal bookkeepers and external auditors CAN personally be held liable for the taxes of the business. But as we say, they don’t. Well to date they haven’t and we don’t foresee that it will change.
It is therefore so important that you take action to liquidate the entity if your taxes are in arrears and you can’t catch up, to avoid personal liability.