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
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:
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 Where an outdated PRN is used, these payments will be allocated on a First-In-First-Out (FIFO) basis.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 [email protected]
™ 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 [email protected]™ 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 [email protected]™ 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.