https://www.polity.org.za
Deepening Democracy through Access to Information
Home / Press Office / Webber Wentzel RSS ← Back
Business|Financial|Power
Business|Financial|Power
business|financial|power
Close

Email this article

separate emails by commas, maximum limit of 4 addresses

Verification Image. Please refresh the page if you cannot see this image.

Sponsored by

Close

Article Enquiry

Expansion of banks’ power to hold funds on suspicion of a tax offence

Verification Image. Please refresh the page if you cannot see this image.
Close

Embed Video

Expansion of banks’ power to hold funds on suspicion of a tax offence

15th August 2017

ARTICLE ENQUIRY      SAVE THIS ARTICLE      EMAIL THIS ARTICLE

Font size: -+

The 2017 draft Taxation Laws Amendment Bill and draft Tax Administration Laws Amendment Bill were released for comment on 19 July 2017.

Section 190(5A) of the Tax Administration Act, 2011 requires a bank to immediately report to SARS if it has a reasonable suspicion that the payment of an amount is related to a tax offence. Then, if instructed to do so by SARS, the bank must hold the funds for two business days pending an investigation by SARS, unless SARS or the High Court directs otherwise.

It appears that members of the financial sector were not satisfied that this provision enabled sufficiently prompt action in cases where a tax offence was suspected. Based on their lobbying efforts, the Draft Tax Administration Laws Amendment Bill accordingly proposes to do away with the requirement that the bank must first obtain SARS’ permission to place the hold on such a transaction. The provision remains otherwise unchanged. The effect is that the funds in question will be secured (held) as soon as the bank reports the transaction to SARS, at which point the two business days will commence.

Whilst swift action is understandably ideal in a case where funds are truly related to a tax offence, banks should arguably be circumspect in exercising this expanded power, and should be certain that their suspicions in this regard are truly reasonable. If a banking client requires a bona fide, legitimate transaction to be carried out swiftly, particularly where large amounts are involved, a bank may foreseeably open itself up to liability and reputational damage if it places a hold on a transaction based on ultimately unjustified suspicions of a tax offence in motion.

Written by Rudi Katzke of Webber Wentzel

Advertisement
To watch Creamer Media's latest video reports, click here
 
Advertisement

EMAIL THIS ARTICLE      SAVE THIS ARTICLE ARTICLE ENQUIRY

To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here

Comment Guidelines

About

Polity.org.za is a product of Creamer Media.
www.creamermedia.co.za

Other Creamer Media Products include:
Engineering News
Mining Weekly
Research Channel Africa

Read more

Subscriptions

We offer a variety of subscriptions to our Magazine, Website, PDF Reports and our photo library.

Subscriptions are available via the Creamer Media Store.

View store

Advertise

Advertising on Polity.org.za is an effective way to build and consolidate a company's profile among clients and prospective clients. Email advertising@creamermedia.co.za

View options
Free daily email newsletter Register Now