Page 39 - SAIT Compendium 2016 Volume2

Write-off INCOME TAX ACT: REGULATIONS ANd NOTICES Write-off
(d) document the history of the recovery process and the reasons for deciding to write off the tax debt on a temporary or permanent basis.
(2) In deciding whether to support an offer of compromise made to creditors in terms of section 311 of the Companies Act the Commissioner must, in addition to considering the information as contemplated in section 312 of that Act, consider the provisions of paragraph 9, 10 (1) and 11 mutatis mutandis.
PART 5 Compromise of tax debt
9 Compromise of tax debt
The Commissioner may compromise a portion of a tax debt upon written request by a debtor, which complies with the requirements of paragraph 10, if the purpose of that compromise is to secure the highest net return from the recovery of that tax debt taking into account considerations of good management of the tax system and administrative ef ciency.
10 Request by debtor for compromise
(1) A request by a debtor for a tax debt to be compromised by the Commissioner must be signed by the debtor and be supported by a detailed statement setting out—
(a) all assets and liabilities of the debtor re ecting the current market value of those assets;
(b) all amounts received by or accrued to and expenditure incurred by the debtor during the 12 months immediately
preceding the request;
(c) all assets which have been disposed of in the preceding three years, or such longer period as the Commissioner
deems appropriate;
(d) the value of all assets so disposed of, the consideration received or accrued, the identity of the person who acquired
the assets and the relationship between the debtor and the person who acquired the assets (if any);
(e) the debtor’s future interests in any assets, whether certain or contingent or subject to the exercise of a discretionary
power by any other person;
(f) all assets over which the debtor, either alone or with other persons, has any direct or indirect power of appointment
or disposal, whether as trustee or otherwise;
(g) details of any connected persons in relation to that debtor;
(h) the debtor’s present sources and level of income and the anticipated sources and level of income for the next three
(i)
years, with an outline of the debtor’s nancial plans for the future; and
the debtor’s reasons for seeking a compromise.
(2) The request must be accompanied by the evidence supporting the debtor’s claims for not being able to make
payment of the full amount of that tax debt.
(3) The debtor must warrant that the information provided in the application is accurate and complete.
(4) The Commissioner may require that the application be supplemented by such further information as may be
required.
11 Consideration of request to compromise tax debt
(1) In considering a request for a compromise, the Commissioner must have regard to the extent that the compromise may result in—
(a) savings in the costs of collection;
(b) collection at an earlier date than would otherwise be the case without the compromise;
(c) collection of a greater sum than would otherwise have been recovered; and
(d) the abandonment by the debtor of some claim or right, that has a monetary value, arising under any Act administered
by the Commissioner, including any right to carry forward any assessed loss or assessed capital loss. (2) In determining the position without the compromise, the Commissioner must have regard to—
(a) the value of the debtor’s present assets;
(b) future prospects of the debtor, including any arrangements which have been implemented or are proposed which
may have the effect of diverting income or assets that may otherwise accrue to or be acquired by the debtor or any
connected person in relation to the debtor;
(c) past transactions of the debtor; and
(d) the position of any connected person in relation to the debtor.
12 Circumstances where not appropriate to compromise tax debt
Notwithstanding paragraph 9, the Commissioner may not compromise any amount of tax debt if—
(a) the amount payable by the debtor in terms of the agreement to compromise will be less than the market value of the total assets of the debtor, which can be applied to reduce the tax debt, after deducting the liabilities of that debtor
other than the tax debt;
(b) the compromise will prejudice other creditors (unless the affected creditors consent to the compromise) or where
other creditors will be placed in a position of advantage relative to the Commissioner;
(c) any other creditor has communicated its intention to initiate or has initiated liquidation or sequestration
proceedings;
(d) the tax affairs of the debtor (other than the outstanding tax debt) are not up to date;
(e) the only reason to support the request to compromise is the debtor’s claim of hardship in paying the tax debt,
including the need to sell a home or business;
(f) the purpose of the decision to compromise is—
(i) to assist a debtor who has become overcommitted;
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