The Tax Administration Act provides that a person who wilfully or negligently fails to pay tax when due commits an offence. However, in practice, SARS generally treats ordinary non-payment as a debt matter rather than a criminal one. Once the payment due date
and any applicable grace period have lapsed, late payment interest will begin to accrue and SARS may initiate debt collection steps, unless there is evidence of fraud, dishonesty, or intentional non-compliance.
It is often advisable to engage SARS proactively where financial constraints exist.
When can you request a payment arrangement?
If a taxpayer is unable to settle their tax liability in full after an assessment has been issued, they may request to enter into a payment arrangement with SARS. Importantly, a taxpayer does not need to wait for debt collection action to commence before applying. It is often advisable to engage SARS proactively where financial constraints exist.
What is a payment arrangement?
A payment arrangement is a formal agreement with SARS that allows a taxpayer to settle outstanding tax in one future lump sum or in instalments over an agreed period. The arrangement covers the full outstanding amount, including any applicable interest. Meaning when the agreement is concluded, the repayment amount includes interest that will accrue over the agreed payment term.
When will SARS approve a payment arrangement?
SARS will only approve a payment arrangement if it is satisfied that the request is justified and reasonable in the circumstances. This includes situations where:
- You cannot afford to pay the full amount right now due to lack of assets or cash flow constraints. However, your financial situation is expected to improve in the future.
- You have future income that can be used to pay the debt, as you anticipate receiving an income or other receipts which can be used to settle the tax debt.
- Collecting the debt immediately would be difficult, costly, or unrealistic but are likely to improve in the future.
- A payment plan would be fair in your circumstances and will not harm SARS’ ability to collect the tax debt.
- You can provide security if SARS requests it.
- You have submitted all outstanding tax returns. You are otherwise compliant with SARS, apart from the outstanding tax debt.
The payment period
A payment arrangement may be structured over a period of between 1 and 36 months. Where the proposed repayment period is between 1 and 6 months, SARS generally does not require supporting documentation. However, where the repayment period exceeds 6 months, SARS will require supporting documentation before approving the arrangement.
Supporting documents required
For Company / Close Corporation / Trust / Sole Proprietor/ Partnership:
- Bank statements for the past three months
- A 12-month cash flow projection
- Financial statements for the previous three years (where applicable)
- Management accounts from the last financial year-end to date
- A detailed asset register, including disposals for the past three years
- A detailed debtor and creditor analysis
For individuals (salary earners):
- Bank statements for the past six months
- Most recent payslip
- Proof of outstanding monthly expenses
How to apply
A taxpayer may apply for a payment arrangement through one of the following channels:
SARS eFiling: Log into your SARS eFiling profile and select the option to apply for a payment arrangement.
SARS Contact Centre: Contact the SARS Contact Centre on 0800 00 7277 and request assistance with submitting a payment arrangement application. SARS will provide the necessary documentation for signature in order to formalise the arrangement after the process has been initiated on the call.
SARS Branch Office: Visit a SARS branch office for in-person assistance or book a virtual appointment to obtain guidance and submit your application.
Deferral of payment arrangements with SARS
Don't wait for SARS to come knocking. Learn how a payment arrangement can help you manage your tax debt on your terms.