The South African Revenue Service (SARS) has broad legal powers to recover unpaid taxes, with mechanisms that can affect salaries, pensions, and bank accounts. In the 2024-2025 fiscal year, SARS collected over R1.68 trillion in tax revenue, reflecting a 7.7% increase from the previous year, emphasizing its strict enforcement capabilities.
Using the Tax Administration Act (TAA), SARS can demand payment directly from taxpayers or third parties, such as banks, employers, and pension fund administrators. A recent case, Piet v CSARS (2025), confirmed that SARS can access pension funds to recover outstanding tax debts, setting a major legal precedent.
How SARS Recovers Unpaid Taxes
SARS can issue directives to third parties (e.g., banks, employers, and pension funds) to recover unpaid taxes directly from a taxpayer’s financial assets.
- Employers can be ordered to deduct unpaid taxes from salaries.
- Banks may be directed to withdraw funds from bank accounts.
- Pension administrators can be instructed to pay SARS directly from a taxpayer’s retirement savings.
SARS Debt Recovery Process
- Final Demand Notice – SARS first issues a notice to the taxpayer, stating the amount owed and how to settle it.
- Third-Party Collection – If the taxpayer doesn’t respond, SARS orders third parties (banks, employers, pension funds) to recover the amount.
- Legal Consequences – If third parties fail to comply, they may be held personally liable for the tax debt.
Assets SARS Can Seize
| Type of Asset | How SARS Recovers Debt |
|---|---|
| Bank Accounts | Direct withdrawals through bank directives |
| Salaries & Wages | Employers deduct the owed amount from payroll |
| Pension Savings | SARS can seize funds when they become accessible |
Landmark Case
In August 2025, a High Court ruling confirmed SARS’ ability to access pension funds for tax debt recovery.
- SARS ordered a retirement fund administrator to transfer R146,000 from a taxpayer’s pension to settle outstanding tax debts.
- The taxpayer challenged the ruling, arguing that pension savings are protected under the Pension Funds Act (PFA).
- The High Court ruled in favor of SARS, stating that Section 179 of the TAA overrides certain PFA protections.
Legal Implications
- Section 37A of the Pension Funds Act generally protects pension funds from creditors, but exceptions apply to tax debts.
- Section 36 of the South African Constitution allows reasonable limitations on rights in the public interest, including tax enforcement.
- Courts have consistently upheld SARS’ authority, confirming that unpaid taxes take priority over pension protections.
SARS and the Two-Pot Retirement System
The Two-Pot Retirement System, introduced in 2025, reinforces SARS’ ability to recover tax debts from pensions.
- Savings Component – If a taxpayer withdraws retirement savings early, any outstanding tax debt must be paid first.
- Compliance Requirements – Pension fund administrators must prioritize SARS payments before releasing any funds to the taxpayer.
This system ensures that tax debts cannot be avoided through early pension withdrawals.
Protect Their Finances
SARS’ strict enforcement measures mean taxpayers must take proactive steps to avoid financial disruptions.
Risks to Taxpayers
- Salaries and wages can be garnished directly from employer payrolls.
- Pension savings can be seized, reducing future retirement security.
Preventive Measures
| Action | Benefit |
|---|---|
| File Taxes on Time | Avoid penalties and interest |
| Engage with SARS | Arrange payment plans for tax debts |
| Seek Professional Advice | Legal and tax experts can assist with disputes |
SARS’ ability to recover unpaid taxes from salaries, bank accounts, and pensions underscores the importance of tax compliance in South Africa. As regulations evolve, staying informed and proactive can help taxpayers avoid financial stress. If you have outstanding tax debt, engaging with SARS early is the best course of action.
FAQs
Can SARS take money from my bank account?
Yes, SARS can issue a directive to your bank to recover unpaid taxes.
Can SARS take money from my pension?
Yes, SARS can access pension funds once they become available to the taxpayer.
What happens if I ignore a SARS tax debt notice?
SARS can seize funds from your salary, bank account, or pension savings.
Does the Two-Pot Retirement System affect tax debts?
Yes, before withdrawing funds, any tax debt must be settled first.
How can I prevent SARS from taking my salary or pension?
Filing taxes on time and arranging a payment plan with SARS can help avoid enforced collections.
