Written by Alicia
Updated 2 December 2024
Insolvency is a state of financial distress when a person or business is unable to pay their debts.
Sequestration is a legal process that is used to deal with your financial difficulties and manage your debts. It gives you legal relief from creditors, while the debt recovery efforts of the various companies you owe are put on hold.
An application needs to be filed with the High Court, which is done by yourself or your creditors. Thereafter, a trustee will be appointed by the High Court who will do the following for you:
You or your trustee needs to ensure that all tax returns are filed relating to your old tax number. This means that all income and expenses incurred prior to the date you were sequestrated needs to be declared on the old tax number. It is important to note that any submissions made on the old tax number, after your tax file is coded as an insolvent estate, will be routed for manual processing as these returns will form part of your insolvency.
NB: Please ensure that SARS deactivates this tax number once your filing obligations are met to avoid any administrative penalties.
Once your new tax number is issued (a process your trustee should tend to) you can log onto your old eFiling profile and link the new tax number to your old profile. All income earned and expenses incurred needs to be declared from the date you were declared insolvent. This would mean that you might have to declare part of your income for one tax year on two different tax returns (i.e. pre-sequestration income on the old tax number's return and post-sequestration income on the new tax number's return). It is possible to do this on eFiling yourself, but it would be safer to ask a tax practitioner or your trustee to tend to your first submission for you.
You can register for a new tax number on eFiling. Please log into your profile and click "Home", "User", "Maintain SARS Registered Details", click on "I Agree" and then "Continue". This should open your RAV01.
You will then need to select "My Tax Products" in the WRAV01 menu and choose "Income Tax". It is important to note that your old tax number (pre-sequestration) should show as deactivated. If it's not, you won't have the option to add a new tax number.
Once the old tax number is deactivated, the option to register a new tax number should be available on the top right hand side of your RAV01. After you followed these steps again: log into your profile and click "Home", "User", "Maintain SARS Registered Details", click on "I Agree" and then "Continue". This should open your RAV01. You will then need to select "My Tax Products" in the WRAV01 menu and choose "Income Tax". The deactivated tax number should show in the middle of your page. Please select the button saying "Add New Product Registration" on your top right hand side of your RAV01 and enter your date of liability and select which taxpayer type you would like to register for.
Please ensure that your tax status is compliant (i.e all tax returns are submitted and balances are paid) before attempting to deregister the tax number. If the old tax number is showing in the middle of your page and the tax status is active, please select the tax number. This will open the "Registration Amendments And Verification Form"(RAV01). You can then scroll down on the page and click "Tax Type Demographics" and click on "Deactivate", click on "Done" and "Submit form".
This process will create a case on the SARS internal system and the auditor assigned to your estate will reach out to you or your trustee if anything is outstanding on your tax file. Once done, the old tax number will then become inactive on SARS side.
NB: remember to scroll back up, click on "Done" and then click on "Submit Form", if you do not click these two buttons your request will not be seen as submitted and SARS won't issue you a new tax number.
Steps to add the new tax number to your eFiling profile:
STEP 1: Log into your eFiling profile
STEP 2: Once you are on the landing page, click on the 3 (three) dots on top next to the word "Individual."
STEP 3: Click on Add Portfolio at the top right side and create a portfolio.
STEP 4: On the Portfolio block, under the Portfolio Type, you should then select the option for "Organisation".
STEP 5: Next, you will need to click on the "Go to Portfolio" button. Select the one next to the new organisation you just created.
STEP 6: Click on "Organisation" at top of your screen.
STEP 7: Registration
“Organisation” details will display on your left-hand side. Click on “Organisation”, then “Tax Types” and thereafter “Manage Tax Types”:
STEP 8: “Manage Tax Type” screen will display:
Select the new tax number, and scroll down and click on Submit.
If there are any issues, it may help to contact SARS:
-Call the SARS Contact Centre on 0800 00 7277 and select option 0 (zero). A SARS official will book the appointment on your behalf.
-Send an SMS to 47277 (iSARS) with this information and format: Booking (Space) ID number/Passport number/ Asylum Seeker number.
-Book an appointment online by clicking here
When I log into my eFiling profile, I see only my old tax number. What must I do?
You can access your new tax number by logging into your eFiling profile, selecting your tax portfolio and then clicking “Home”, on the left of your page click on “User”, “Tax Types”, “Manage Tax Types” and in the middle of your page there should be a small plus sign, if you click on it both your tax numbers should show.
Please tick the new tax number and scroll down and click on “Add/Submit.” You might have to log out of eFiling and then back in again for the changes to take effect.
My trustee sent my new tax number to me but my IRP5 still has my old tax number on it. How can I change this?
You will need to forward your new tax number to your employer and ask them to update your IRP5.
I recently applied for sequestration, and it is still in progress. Should I wait until it has been approved before filing my current tax return or can I go ahead and submit it to avoid being penalised for filing my return late?
Seeing as your sequestration application is still in progress, you will need to file your tax return with SARS before the tax season closes. As soon as your tax file is coded as insolvent on SARS backend, the tax return will be routed to the estate's department, and they will then consult with you, or your appointed trustee should the assessor need any additional documentation from you.
My husband’s sequestration application has recently been approved by the High Court. We are married out of community of property - should I also have two tax numbers with SARS?
The sequestration would not affect your communal estate as you are married out of community of property. Therefore you do not need to apply for a second tax number.
Why is SARS taking so long to issue assessments for my old tax returns? I used my old tax number to file the outstanding returns, and these assessments are delayed. However, tax returns filed on the new tax number are assessed as soon as I click on submit. Did I do something wrong? The older tax returns only had my salary on it - no business income was included.
Your old tax number is linked to your sequestrated estate; this means that any movement on this tax number would be routed to the SARS estate's department, and they have ninety business days to issue an assessment. Unfortunately, you are going to have to give SARS the time they need to work through your tax returns, even if they seem like simple submissions.
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