KwaZulu-Natal High Court: Grants SARS Mkhize s 163 TAA Preserved Properties Sale

• A KwaZulu-Natal High Court judgment authorized the sale of preserved properties.
• The sale was approved under Section 163 of the Tax Administration Act.
• The court's decision aimed to protect the value of the assets.
• This authorization occurred before a final determination on the executability of the tax debts.
• The case is referenced as Commissioner for South African Revenue Service v Mkhize and Others (ZAKZDHC 102 D13795/2024).

The judgment allows for the disposal of assets to prevent their depreciation while the underlying tax liability is being fully adjudicated.

The KwaZulu-Natal High Court recently issued a significant judgment in the case of Commissioner for South African Revenue Service v Mkhize and Others, referenced as ZAKZDHC 102 D13795/2024, on 26 October 2026. This ruling specifically granted the Commissioner for the South African Revenue Service (SARS) the authority to proceed with the sale of certain assets. These assets were identified as "preserved properties," meaning they were already subject to a preservation order.

The court's decision to permit this SARS Mkhize s 163 TAA preserved properties sale was explicitly made under the provisions of Section 163 of the Tax Administration Act. A key motivation behind this authorization was to safeguard the inherent value of these properties. This measure was deemed necessary even though the final legal process to determine the executability of the associated tax debts was still ongoing. The judgment allows for the disposal of assets to prevent their depreciation while the underlying tax liability is being fully adjudicated.

Section 163 of the Tax Administration Act (TAA) empowers SARS to obtain preservation orders over assets belonging to taxpayers when there is a risk that those assets might be dissipated or concealed, thereby hindering the collection of outstanding tax debts. Such orders typically freeze the assets, preventing their disposal until the tax matter is resolved. The concept of preserved properties tax debt executability refers to the stage where SARS has obtained a final judgment or assessment that allows it to execute against a taxpayer's assets to recover unpaid taxes.

Historically, the sale of such preserved assets would often await the final determination of the tax debt's executability. However, this KwaZulu-Natal High Court tax judgment introduces a crucial nuance. By authorizing the sale of preserved properties prior to a definitive ruling on executability, the court has provided SARS with a more proactive mechanism to manage assets that are at risk of losing value over time. This interpretation of Tax Administration Act Section 163 ensures that the state's potential recovery is not diminished by delays in the legal process.

This ruling carries substantial implications for both the South African Revenue Service and taxpayers involved in disputes over significant tax liabilities. For SARS, the judgment strengthens its hand in asset protection, allowing it to mitigate financial risks associated with prolonged litigation. The ability to initiate a SARS Mkhize s 163 TAA preserved properties sale before a final determination of tax debt executability means that the revenue service can act decisively to prevent the erosion of asset value, ensuring that sufficient funds remain available to cover potential tax obligations.

From a taxpayer's perspective, this development underscores the critical importance of robust legal counsel when facing SARS preservation orders. The judgment clarifies that even if the executability of tax debts is still under review, assets subject to a preservation order are not immune from early sale if their value is deemed at risk. This necessitates a careful re-evaluation of asset management and litigation strategies in tax disputes, as the window for challenging the sale of preserved assets may be narrower than previously understood. It highlights a proactive approach by the courts to ensure the efficacy of tax collection mechanisms.

Lawyers advising clients facing SARS preservation orders should note this judgment clarifies SARS's ability to seek early sale of preserved assets under Section 163 of the TAA to protect their value, even before a final determination on the executability of the tax debts. This impacts asset management and litigation strategy in tax disputes.

Source: Original reporting via LawLibrary judgment