2023 tax return deadline

Here’s the 2023 tax return deadline. Picture: OUTA.

Are you in debt to SARS? Here’s your next step

Irregular cash flow and the cost-of-living crisis has made tax compliance tricker than ever. Here’s what to do if you’re in debt to SARS.

2023 tax return deadline

Here’s the 2023 tax return deadline. Picture: OUTA.

The 2023 tax season kicked off on July 7 2023 and the deadline for individual taxpayers closes on October 23 2023. Many South Africans are hoping for an uneventful process in which they hopefully receive some sort of tax refund. However, others may end up in debt to SARS once their tax return is filed.

If you’re in this scenario, here’s your next step …


in debt to SARS
There are options if you’re in debt to SARS. Picture: SARS.

According to Candice Mullins from The Tax House, as reported by Business Tech, small businesses and individual taxpayers are already in a tight spot this year. Irregular cash flow, rampant inflation and the cost-of-living crisis has made tax compliance a real challenge.

ALSO READ: SARS eFiling issues: Here’s what you do to fix the problem

Mullins says there are a variety of reasons that you can go into debt with SARS. “Some may be pushed into the red due to penalties from late submission, while others may simply fail to pay. Either way, being in debt to SARS is not ideal, but you can take steps to make things right.”


in debt to SARS
Here’s what to do if you’re in debt to SARS. Picture: Stock.

There are two mechanisms that SARS has for those that can’t settle their debt. One is a deferred payment arrangement, and the other is compromise.

“A deferral arrangement is an arrangement that a taxpayer enters into because they don’t have the cash, but they need to pay SARS immediately. Instead of simply not paying and incurring penalties and interest they sign an agreement with SARS to extend the payment period.

UPDATED: Where you’ll find SARS mobile tax units for August

“This usually takes the form of equal monthly instalments for a certain period until the debt is repaid. The debt is not forgiven, but you have a longer time to pay it off,” says Mullins.

A compromise, on the other hand, is an agreement where SARS extinguishes some or all of the tax debt owed by the taxpayer. However, this only happens under rare circumstances and a compromise agreement is only entered into when a taxpayer is in a dire situation.

ALSO READ: What to do if you don’t know how to submit your tax return

If a compromise agreement is reached, SARS will ordinarily waive penalties and interest. So, how do you apply and qualify for either?


  • You suffer from a lack of assets or liquidity which is reasonably certain to be remedied in the future.
  • Anticipate income or other receipts which can be used to satisfy the tax debt.
  • Show that prospects of immediate collection activity are poor or uneconomical are unlikely to improve.
  • Show that collection activity would be harsh in terms of the individual/business’ survival
  • Provide security as may be required.
  • Submit all outstanding returns.

Mullins warns that if you make a deferral agreement with SARS and default, you will have broken the agreement. SARS will consider the contract null and void, and will reinstate the penalties and interest, and debt will be collectable immediately.


  • The fair value of your assets.
  • Description of any prospects and transactions.
  • The monetary value of any future right you will forgo.
  • Details of any connected parties to you as the taxpayer.
  • SARS will consider both the taxpayer concerned and whether a person in their fiduciary capacity could be liable for such taxes.

If suitable for compromise, a senior SARS official and the authorised public officer will enter into a compromise agreement setting out the following items:

  • The amount payable by the taxpayer in full settlement of the tax liability.
  • An undertaking by SARS to cease pursuing recovery of the tax owing after an agreed settlement is made.
  • The conditions subject to which the tax debt is compromised.

Mullins reiterates that it’s essential to be straightforward and honest. SARS is free to break the agreement if they find that you misrepresented the truth in any way. If SARS cuts off the compromise agreement, the full debt plus penalties and interest will immediately be reinstated.


Here's why you should complete a tax return. Picture: File.
Picture: File.

In both situations if you were in debt to SARS, and have been through the above process, the taxpayer will receive a clean Tax Clearance Certificate.

ALSO READ: Important changes to SARS payment procedure

However, Mullins says to avoid being in debt to SARS, you should never hold back payments. Doing so will always catch up with you and harsh penalties and fines applied will be more detrimental in the long run.

Don’t forget that you have until October 23 2023 to submit your tax return.

This article is for informational purposes only and should not be construed as financial, tax or legal advice. For further details consult the SARS website or get in touch with a tax specialist like The Tax House.