GUIDELINES FOR THIRD PARTY APPOINTMENTS (AA88)

What's new?

11 November 2019 - Employers to collect overdue tax debt and administrative penalties
SARS is extending our appointment of employers as third parties to collect overdue assessed tax debt in addition to the current administrative penalties. These appointments are being made in terms of in terms of Section 179 of the Tax Administration Act (No. 28 of 2011). Only employers who have employees with such outstanding tax debt will be affected. Once an affected employer is appointed by SARS as a third party, the employer must deduct the overdue tax debt from the employee’s salary and pay the money over to SARS.

In the past, SARS largely appointed employers to deduct money owing to SARS in respect of administrative penalties which were imposed on a taxpayer for non-submission of a return. However, this time the third party appointment of an employer will be for overdue tax debt resulting from an assessment that was raised by SARS following the submission of a personal income tax return. The appointment of employers as a third party to act on behalf of SARS is the final step in a lengthy process of debt collection measures undertaken by SARS.

In fact SARS goes out of its way to assist taxpayers by sending reminders through various forms of communication, including letters, SMS’s, courtesy telephone calls and emails. At the end of this lengthy process, when the taxpayer still has not paid the overdue tax debt, SARS has no choice but to appoint third parties (such as employers/banks) to collect the overdue debt on behalf of SARS.

Affected employers are encouraged to check An Employers Guide to the Third Party Appointment Process on how these deductions should be paid over to SARS. SARS appeals to you to help us in ensuring that each and every taxpayer complies with their tax obligations and in that way helps to raise the revenue our country needs to ensure growth and development.

What is it?

The Commissioner for the South African Revenue Service (SARS) has the power to appoint any person (referred to as an agent) to pay any outstanding tax, which is due by a taxpayer, out of any money that is held on behalf of the taxpayer. More information:
  • If a taxpayer has outstanding tax debts (this includes penalties), the Tax Administration Act empowers the Commissioner for the South African Revenue Service (SARS) to appoint a third party to recover money held by third parties on behalf of the taxpayer. Third parties could be an employer or a bank, etc.

  • The Third Party Appointment process involves the appointment of a third party (employer, bank or any other person who has the management, custody or control of any income, monies or property of the taxpayer.) to collect any outstanding taxes including administrative penalty amounts from a taxpayer. The third party is responsible to pay the relevant amount to SARS on the taxpayer’s behalf. 
     
  • This means that if you do not respond to any of the notices or demands informing you of your outstanding tax debts, SARS may appoint your employer or any other third party who holds money on your behalf or owes you money, including salary, wages and other types of remuneration, to pay the outstanding amounts to SARS.

  • Failure by a third party appointment to act may lead to that third party being held personally liable for the tax debt and can also be found guilty of an offence. If convicted, the person is subject to a fine or to imprisonment for not longer than two years.

Who is it for?

An agent appointment is done by appointing a third party as an agent through the issuing of a Third party appointment notification (AA88) where a person holds money on behalf of the taxpayer. Examples of agents that may be appointed are employers, financial institutions such as banks and may also include funds, insurance companies, investment managers, attorneys and debtors 
 
The Business Requirement Specification: Process and CSV file specification for Third Party Appointments (AA88) details the process and the file layout for exporting and importing AA88 data from e@syFile™ Employer.

How and when should this be paid?

The payment due date will be reflected on the AA88 that will be sent to relevant agent.
The following payment methods are available:
  • eFiling
  • Electronic transfer via Internet banking
  • Over the counter at branches of the relevant banking institutions.
  • Cheque payments may not exceed R50 000. This limit applies irrespective of the number of tax periods being paid, or should multiple cheque payments be made.
  • e@syFile™ Employer.


Enhanced Payment Allocation on e@syFile™ Employer

The payment allocation rules have been enhanced to include the allocation of payments for AA88 based on the payment reference number (PRN) supplied by an employer. Where an outdated PRN is used, these payments will be allocated on a First-In-First-Out (FIFO) basis.

Cancellation/finalisation of AA88s

SARS would like to advise employers of the additional process for the cancellation of/finalised AA88s.
 
To ensure employees are not negatively impacted, deductions of AA88s should be stopped when an employee has sorted their tax affairs and paid the outstanding AA88 debt.
 
Employers are requested to continuously synchronise the e@syFile™ Employer, to ensure the latest information concerning AA88s is received from SARS.
 
All AA88 deductions must also be stopped, when an employee produces an official SARS letter (which will contain the official SARS stamp) confirming that their tax affairs have been rectified and the outstanding debt has been paid, accompanied by a Penalty Statement of Account (APSA) with a zero balance or an Income Tax Statement of Account (ITSA) with a refund due (credit balance) or a zero balance, which indicates the AA88 debt has been paid.
 
Employers using e@syFile™ Employer are urged to validate the finalised or cancelled AA88s prior to suspending any deductions, in order to minimise the risk of fraudulent documents having been submitted.
 
When an employee produces these documents, employers are requested to immediately discontinue the withholding and payment of the applicable AA88 to SARS. Any funds already withheld, but not paid over to SARS should be returned to the employee. Any overpayment (e.g. where the employer has paid the funds over to SARS already), will be refunded to the employee, provided there are no additional outstanding requirements from SARS (e.g. outstanding returns, updated banking details required, etc.).
 
Employers not using e@syFile™ Employer are encouraged to download the latest version, as numerous enhancements have been made to streamline the management of AA88 helping employers to easily manage and pay their AA88s to SARS.

 

Last Updated: 13/11/2019 9:45 AM     print this page
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