SARS can take the money you owe directly from your employer
The South African Revenue Service (SARS) has announced changes to the third-party appointment process, which allows it to collect outstanding taxes from third parties, including employers.
The third-party appointment process gives SARS the power to collect any outstanding amount, including administrative penalties and tax debt, from any group holding the funds of the person owing them.
“The Tax Administration Act empowers the Commissioner for SARS to appoint a third party to withhold and pay over to SARS any amounts due by a taxpayer in terms of the relevant tax Act,” it said.
“Such a third party may be an employer of the taxpayer or any other person who has the management, custody or control of any income, monies or property of the taxpayer.”
These third parties could include:
- Employers
- Any debtor who owes the taxpayer money
- Financial institutions, such as banks
- Attorneys
- Medical aid schemes (in case of members of the medical fraternity)
- Investment managers
- Insurance companies
The third-party rule applies only if SARS can identify a group holding funds on behalf of the taxpayer that has outstanding debt, and if other conditions have been met.
These conditions include there being no ongoing dispute over the outstanding amount owed to SARS, and that the taxpayer was issued a final demand letter, which was not complied with.
SARS will not necessarily take a person’s full debt from a third party, and might only request a portion from other groups, such as employers.
“Employers must note that the amount reflected on the notice does not represent the total employee’s or taxpayer’s outstanding account balance, as it may differ from the actual balance,” SARS said.
In a new update, SARS announced changes to this process, which will particularly impact employers elected as third parties.
These changes are intended to enhance the appointment process by giving employers more time to load deductions related to it.
“The revised schedule improves the automated process by providing employers with more time to load AA88 deductions before payroll closure and reducing repeated AA88 appointments and cancellations,” SARS said.
SARS has made several efforts in recent years to improve its revenue collection by promoting voluntary compliance and simplifying processes for taxpayers.
The recent changes to the third-party appointment process follow this pattern by providing employers with more time to load deductions through a revised schedule.
R705 billion in its sights
According to Tax Consulting SA, SARS is ramping up its debt collection efforts following the National Treasury’s upward adjustment of its revenue target for the current year.
This is a continuation of its efforts over the past few years to target uncollected taxes owed.
In its Annual Report for the 2025/26 financial year, total tax revenue reached approximately R2.47 trillion, compared with R2.30 trillion in the previous financial year.
However, the figures reveal a significant concern: SARS reported receivables of R705 billion, comprising R658.4 billion in overdue debt and R46.6 billion in taxes assessed but not yet due for payment.
SARS reported that gross receivables before impairment increased by 28.6% during the year, compared with 19.4% in the previous financial year.
The increase was attributed primarily to growth in significant debtors.
The report identifies 1,690 significant taxpayers, each with a consolidated account balance of R50 million or more.
Together, these taxpayers account for approximately R381 billion, representing 54% of the relevant receivables balance
“The scale of these receivables places debt recovery firmly in the spotlight, particularly as SARS seeks to ensure that taxpayers who meet their obligations are not disadvantaged by those who fail to pay,” Tax Consulting said.
The tax experts noted further that SARS is increasingly integrating vast streams of third-party financial data into its compliance ecosystem.
“Financial institutions, employers, medical schemes, investment platforms and other reporting entities provide structured data to SARS,” it said.
This enables the taxman to compare taxpayer declarations against independently sourced financial information.
“Through the use of integrated data analytics tools, SARS can flag inconsistencies between declared income and actual financial activity, identify undeclared revenue streams and highlight taxpayers carrying outstanding liabilities,” the group said.
Risk profiling models can identify taxpayers who may have understated income or claimed inappropriate deductions.
Once flagged, these cases can move quickly from automated engagement to enforcement.
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