Page 38 - SAIT Compendium 2016 Volume2

Write-off INCOME TAX ACT: REGULATIONS ANd NOTICES Write-off
(2) Circumstances may, however, require that the strictness and rigidity of the basic principle be tempered where it would be to the best advantage of the State.
(3) The purpose of these Regulations is to prescribe the circumstances under which the basic rule may be tempered and where the Commissioner may take a decision to write off a tax debt on a temporary or permanent basis.
3 Application of regulations
These Regulations apply only in respect of a tax debt owed by a debtor where the liability to pay that tax debt is not disputed by the debtor.
PART 2 Temporary write-off of tax debt
4 Temporary write-off of tax debt
(1) The Commissioner may temporarily write off an amount of tax debt if the Commissioner is satis ed that the tax debt is uneconomical to pursue as contemplated in paragraph 5 at that time.
(2) A decision by the Commissioner to temporarily write off an amount of tax debt does not absolve the debtor from the liability of that tax debt.
(3) If the Commissioner at any stage pursues the collection of any amount of tax debt which was temporarily written off under this paragraph, the Commissioner must determine interest for the period from the date that the tax debt was so written off to the date of payment at the interest rate applicable during the period that the tax debt was outstanding.
5 Tax debts uneconomical to pursue
(1) A tax debt is uneconomical to pursue if the Commissioner is satis ed that the total cost of recovery of that tax debt will in all likelihood exceed the anticipated amount to be recovered in respect of the outstanding tax debt.
(2) In determining whether the cost of recovery is likely to exceed the anticipated amount to be recovered as contemplated in subparagraph (1), the Commissioner must have regard to—
(a) the amount of the tax debt;
(b) the length of time that the tax debt has been outstanding;
(c) the steps taken to date to recover the tax debt and the costs involved in those steps, including steps taken to locate or trace a debtor;
(d) the likely costs of continuing action to recover the tax debt and the anticipated return from that action, including any likely recovery of costs that may be awarded to the Commissioner;
(e) the nancial position of the debtor, including that debtor’s assets and liabilities, cash ow and possible future income streams of that debtor; and
(f) any other information available with regard to the recoverability of the tax debt. PART 3
Permanent write-off of tax debt
6 Permanent write-off of tax debt
(1) The Commissioner may permanently write off an amount of tax debt—
(a) to the extent that the Commissioner is satis ed, at that time, that the tax debt is irrecoverable at law as contemplated
in paragraph 7; or
(b) if the Commissioner compromised a tax debt in terms of Part 5.
(2) The Commissioner must notify the debtor, in writing, of any amount of tax debt permanently written off.
Irrecoverable at law
7 Tax debts irrecoverable at law
(1) Subject to subsection (2), a tax debt is irrecoverable at law if—
(a) it cannot be recovered by action and judgment of a court; or
(b) it is owed by a debtor that has been liquidated or sequestrated and it represents the balance outstanding—
(i) after notice was given by the liquidator or trustee that no further dividend is to be paid or a nal dividend has been paid to the creditors of the estate; or
(ii) following the termination of a compromise or arrangement as contemplated in section 311 of the Companies Act, with the debtor’s creditors, which has been sanctioned by a court.
(2) A tax debt is not irrecoverable at law if the debtor is a company or a trust and the Commissioner has not rst explored action against or recovery from the personal assets of any director, shareholder, trustee or persons acting in the management of that debtor.
PART 4 Procedures for write-off
8 Procedure for writing off a tax debt on a temporary or permanent basis
(1) Before deciding to write off any tax debt, the Commissioner must—
(a) determine whether there are any other tax debts owing to the Commissioner by the debtor;
(b) reconcile all amounts owed by and to the debtor, including penalties, interest and costs;
(c) obtain a breakdown of the tax debt and the periods to which the outstanding amounts relate; and
30 SAIT CompendIum oF TAx LegISLATIon VoLume 2