SARS issues final demand for R0.01, later says it was an error

A South African taxpayer was sent a final demand by the South African Revenue Service (SARS) for an outstanding balance of R0.01, a notice that SARS later said was an error.

What happened

According to IOL, Moneyweb reported an unnamed taxpayer received a final demand instructing them to settle an outstanding amount of R0.01 within 10 business days. The taxpayer provided Moneyweb with a copy of the demand after removing identifying details.

Details in the notice

IOL reports the notice advised the taxpayer they could apply to defer payment, dispute and suspend the debt, seek a compromise or apply for penalties to be waived once the capital amount had been paid. The taxpayer told Moneyweb they believed the letter was generated automatically and questioned whether there was human oversight of correspondence sent to taxpayers.

Similar problems and risks cited

Moneyweb told IOL that small amounts have caused problems for other taxpayers in the past. The publication cited a case where a taxpayer expecting a R323,000 refund found it blocked because SARS regarded them as R50 behind on their pay-as-you-earn profile. It also referenced a 2022 matter in which a taxpayer assessed for R8.4 million said SARS issued a final demand while a dispute was underway, which a court later found showed failures in SARS’s administrative obligations.

Collection powers and past errors

IOL reports Moneyweb noted that SARS previously acknowledged mistakenly sending final demands rather than reminders in 2013, and that even very small debts can trigger SARS’s collection mechanisms. Moneyweb said SARS can instruct a third party, such as a bank or employer, to recover money directly from a taxpayer’s funds or salary if a debt remains unpaid.

SARS approached for comment

According to IOL, SARS has been approached to comment on whether issuing a final demand for one cent is reasonable and proportionate, whether there is a minimum amount below which it does not pursue outstanding tax debt, and whether a one-cent balance could affect a taxpayer’s compliance status, refunds or lead to further collection action.

According to IOL, this story will be updated with the SARS response once received.