When is a corporation or a company liquidated?
A company’s liquidation or “winding-up” takes place:
When a company is unable to pay its debts due to a creditor’s application; or a voluntary application by a company’s shareholders or members of a close corporation (often referred to as a creditors’ voluntary liquidation); or
In the case of a solvent firm/close corporation, by application of company shareholders or close corporation members.
What exactly is a liquidation?
When a company/close corporation goes through voluntary or compulsory liquidation (also known as “winding – up”), the process of selling all assets, paying off creditors, issuing any leftover assets to shareholders, and closing the company/close corporation is involved.
Who is in charge of the company’s or the corporation’s tax affairs in liquidation?
As part of the winding-up process, the appointed liquidator acts as the public officer for a company/close corporation in liquidation and is responsible for the entity’s tax affairs. The liquidator is also the taxpayer’s representative for the company/close corporation under liquidation.
SARS liquidator’s responsibilities as the taxpayer’s representative
Notifying SARS of the entity’s liquidation.
SARS interaction involving the entity
Outstanding tax returns must be submitted.
Payment of unpaid tax liabilities.
If a liquidator fails to comply with the provisions of the applicable tax Act and the Tax Administration Act for a company/close corporation in liquidation, that person may be held personally accountable for any tax payable in representative capacity. Such liability arises if the liquidator alienates, levies, or disposes of the income on which the tax is chargeable, or disposes of any fund or money in that person’s possession from which the tax could have properly been paid.
How can I begin the process of notifying SARS of an estate?
From the standpoint of SARS, a company or close corporation in liquidation is considered an estate. At this point, there are two alternatives for reporting a new Estate Case to SARS:
Sending an email to SARS’s email addresses or
by submitting it via the new SARS Online Query System
It is critical to provide the relevant Supporting Documentation to SARS when reporting a new Estate Case. Please see our FAQ for further information on what is required to report the new Estate to SARS.
Updated information about the Estate’s Representative Taxpayer
The estate’s nominated representative taxpayer (the Liquidator(s)) must ensure that the necessary formal appointment documents are supplied to SARS in order for the details regarding the estate’s representative taxpayer to be updated. This is critical during the estate start and finalization process since all correspondence addressing tax inquiries, eFiling issues, and estates compliance is delivered to the correct email address. As a result, all representative taxpayers must ensure that their personal tax profile with SARS is current and includes the correct contact information and email address. When amending the relationship between the estate and the representative taxpayer, no alterations or amendments to the representative taxpayer’s profile are permitted. Personal taxpayer profiles for the representative taxpayer can be updated via the various electronic channels. Corporate stakeholders (Liquidators) that nominate their workers as the appointed Liquidator of an estate by the Master of the High Court should ensure that these employees’ personal tax profiles with SARS are current and up to date. Their contact information and email address are vital for direct communication and the effective operation of the SARS Estates processes. These modifications and adjustments, if necessary, cannot be completed as part of the estate process. To achieve such updates and modifications, employees must follow the usually prescribed methods.
