Malema among 14,000 insolvent taxpayers

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Independent Newspapers.

Julius Malema speaks to a full OR Tambo Hall in Khayelitsha last month, rowsing the crowd into song with his two-hour speech about economic freedom, the ANC political elite and the equality and unification of races. Picture : Thomas Holder.

Johannesburg - Julius Malema is among nearly 14 000 people petitioned for bankruptcy by the taxman in the past two years as the SA Revenue Service (Sars) uses more muscle in trying to recover more than R18 billion of outstanding taxes in its debt book.

Malema who was this week placed under provisional sequestration by the Pretoria High Court for his unpaid R16 million tax bill, is one of 7 782 individuals against whom the taxman obtained civil judgments for insolvency in the current financial year, according to Sars spokesman Adrian Lackay.

In 2012, Sars successfully obtained 5 397 civil judgments for bankruptcy against individuals whose combined outstanding tax bill was R1.8bn, the result of which Lackay said showed that Revenue’s debt collection was more streamlined and proactive now.

“Our capacity to pursue individuals has increased but also the big factor in this is the justice system,” he said. “Our debt book is currently sitting on R18 billion of outstanding taxes to Sars.

“Although debt fluctuates and we have had to change the figures, we still have a lot to collect from individuals of all income brackets,” he said.

According to Statistics SA there were an estimated 3 000 insolvencies in general against individuals and partnerships last year, a 1.9 percent decrease compared to the previous year, but the figure is recorded in a calendar, rather than a financial year.

Malema’s party – Economic Freedom Fighters – said it had accepted a proposal from “independent and concerned” South Africans to set up a trust to raise funds to bail him out on the money he owed Sars.

The party said it disputed the R16m figure from Sars, saying it was inflated after the taxman had “tricked” Malema to sign an admission of debt on the basis that an agreement would be reached on how the debt would be settled.

The party said Malema owed Sars only R4m.

Lackay, however, said anyone who wished to challenge the merits of the provisional court order or the merits of a tax dispute, should do so before court.

“In this instance the Gauteng North High Court would be the most appropriate place to do so,” he added.

“The return date of May 26, 2014 has been set by the court for this purpose, as well as to adjudicate on whether the provisional sequestration order should be made final.”

Lackay said that as a creditor in the matter Sars had exercised its rights through due legal process in pursuing more than R16m in outstanding personal income tax.

 

Timeline of SARS’ pursuit of Malema according to court papers

 

- 2006, Malema registers as a taxpayer.

- End of 2009, Sars approaches Malema to advise that he is non-compliant in terms of his obligations of the Income Tax Act.

- April 2010 Financial Investigations Unit of Sars starts verification process of Malema’s tax affairs. At the time he has still not submitted tax returns.

- A few months later Malema hires tax consultants and submits returns related to 2006, 2007, 2008, 2009 and 2010.

- Sars establishes that Malema had failed to register his family trust Ratanang Family Trust as a taxpayer. Sars discovers in a review of his tax affairs that numerous amounts were received by Malema and the Trust which were not declared. In 2005 it is found that Malema received a salary and paid no tax on it.

- In 2011 Malema terminates the services of his first tax consultant.

- In 2012, Sars proceeds to raise assessments in line with its review findings in relation to 2005 to 2011. Sars registers Malema as taxpayer for 2005 and raises additional estimated assessments for the years 2006 to 2011. The assessments result in a liability to Sars of more than R16 million, with interest calculated at the prescribed date from April 2012 to date of final payment.

- May 2012, Malema lodges application to compel Sars to provide reasons for his tax assessments.

- June 2012 , Malema submits application for deferment of payment of taxes

- July 2012 Malema files notice of objection against assessments.

- August 2012, Sars advises Malema that his application for deferment is unsuccessful.

- September 6, 2012, Sars writes to Malema advising him that no payment had been received and that Sars would proceed to obtain judgment and collect outstanding liability.

- September 11, 2012, Sars files a statement for civil judgment in the Pretoria High Court.

- October 2, Sars advises Malema that it intends to assess a further R2.1m which was found not to have been declared in 2011.

- October 11, a “without prejudice” meeting takes place between Sars, Malema and his lawyers. Various proposals are discussed including that Malema submits a proposal to settle the tax disputes for the 2009 to 2012 assessments among others.

- October 31, 2012, Malema’s attorneys make written representations to request a compromise on his tax debt.

- November 1, 2012, Malema withdraws the representations and issues a new request for compromise.

- January 17, 2013, Malema is notified that request for compromise is rejected. Malema would have borrowed R4m to effect payment to Sars as full and final payment of his tax liability till 2011.

- Sars declares Malema insolvent and says he is in no position to make payment for his Sars debt.

- February 10, 2014, the Pretoria High Court grants a provisional sequestration order to Sars.


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