Taxpayers who owe money to the South African Revenue Service are heading into a much tougher period. SARS Commissioner Johnstone Makhubu has warned that the tax authority will chase unpaid debt hard. A Letter of Final Demand can now be issued for amounts as low as R5,000.
The message is clear. Ignoring a tax debt is no longer a safe option.
What the Commissioner said
Makhubu spoke at the SAIT Tax Indaba 2026. He told the audience that the tax debt book has grown to more than R600 billion. Not all of that money can be recovered. SARS believes about R280 billion is collectable.
The target for this year is R126 billion from that collectable pool. That is a big number, and it explains the harder approach.
Makhubu also said SARS offers several relief options to help people settle what they owe. But he made one point very plainly. These tools are not there for people who want to “play games” with the system. They exist to help honest taxpayers who are struggling, not to help people dodge what they owe.
Most compromise requests are being turned down
In 2025, SARS introduced an Expedited Tax Debt Process with Recognised Controlling Bodies. It was meant to give taxpayers a quicker way to ask for a compromise on undisputed debts older than 12 months.
The results have not been encouraging for applicants. Makhubu said almost 90% of the applications were rejected. The reason was simple. Most applicants could not prove real financial hardship.
In many cases, bank statements told the story. People had far more money available than they had offered to pay. SARS saw this and said no.
A much harder collection drive
Tax experts say the shift is already visible. Jashwin Baijoo is a Partner and Head of Strategic Engagement and Compliance at Tax Consulting South Africa. He said SARS now sends a Letter of Final Demand for a debt of only R5,000.
Once that letter is sent, the follow up can be serious. Baijoo explained that SARS can use several tools if payment does not arrive:
- Third party appointments, where SARS collects money from someone who holds funds for you
- Civil judgments against the taxpayer
- Garnishee orders, which take money straight from a salary or bank account
- Personal liability for directors and others when a company owes the tax
He described the last 18 months as a “massive collection drive”. He also said this is very different from the past. Before, a taxpayer could receive a final demand and still hear little from SARS, even when millions of rand were owed.
To be clear, a tax debt is an amount legally owed to SARS that has stayed unpaid for 30 days or more.
How a tax debt can grow fast
Many people think a tax debt will stay the same size. That is not always true.
Debts can start for many reasons. Some come from honest mistakes. Others come from carelessness or a lack of knowledge. Some businesses also choose to spend their cash on daily costs and leave tax unpaid.
The danger is that penalties and interest keep adding up. One example shared at the event showed a R2 million liability growing to R10 million once understatement penalties and interest were added.
SARS says more than R25 billion of the current tax debt comes from administrative penalties. Makhubu added that SARS is now comparing its penalty system with those used in OECD countries. The goal is to see whether South Africa sits at the extreme end or is in line with others. No changes were announced, so taxpayers should not expect penalties to disappear.
What to do if you get a Letter of Final Demand
A Letter of Final Demand is not the end of the road. It is a warning with a clock attached. Taxpayers usually have 10 business days to fix the problem.
The right step depends on your situation. The options are easy to list, even if the choice is not always easy to make.
| Option | What it means |
|---|---|
| Pay the debt | Settle the full amount owed to SARS |
| Payment arrangement | Repay the full debt over time in agreed instalments |
| Suspension of payment | Ask SARS to pause collection while you challenge the assessment |
| Dispute the assessment | Object if you believe the amount is wrong |
| Compromise | Ask SARS to accept less, but only with proof of severe hardship |
André Daniels is Head of Tax Controversy and Dispute Resolution at Tax Consulting South Africa. He stressed that debt relief is not meant for people who simply want to pay less than they owe.
He explained the difference between two key tools. A deferral lets qualifying taxpayers pay the full amount over time. A compromise can lower the amount payable, but only where severe financial hardship is shown. The burden of proof sits with the taxpayer. In other words, you must show the evidence.
Do not ignore your right to challenge an assessment
Daniels also warned that many taxpayers do not take the dispute process seriously enough. If you think an assessment is wrong, you can ask SARS for its reasons. This is a simple first step, and it matters. The reasons can help you understand why SARS raised the assessment, and they give you a base for a proper objection.
There is one catch. A dispute does not wipe out the debt. It also does not stop SARS from trying to collect. However, you can ask for a suspension of payment while the dispute is being looked at. Making that request is a simple step that many people forget.
Practical tips for South African taxpayers
The news from the Indaba points to a few simple lessons.
1. Check your SARS account often. Do not wait for a letter. Log in to your profile on eFiling and look for outstanding balances. The official SARS website at www.sars.gov.za has the tools and guides you need.
2. Act early. A small debt is easier to deal with than a large one. Interest and penalties make waiting expensive.
3. Be honest about your finances. If you ask for a compromise, SARS will test your claim against your bank records. An easy way to lose a request is to understate what you can afford.
4. Keep your records tidy. Good documents make a dispute or payment plan far more likely to succeed.
5. Get proper advice. A registered tax practitioner can explain your options in plain language. If you feel SARS has treated you unfairly, the Tax Ombud is an independent office that can look into complaints. You can find it at www.taxombud.gov.za.
What this means going forward
SARS has set a firm goal of collecting R126 billion this year. It has shown that it will say no to weak hardship claims. Experts say it is already using strong legal tools against people who do not pay.
For ordinary taxpayers, the lesson is easy to understand. Pay what you owe on time, or speak to SARS early and honestly. If you disagree with an assessment, challenge it the right way and ask for a suspension of payment.
Ignoring a debt will not make it go away. It will only make it bigger.
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