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SARS and Malema deal falls through

By Staff Writer
According to reports, the South African Revenue Service (SARS) has lodged an application with the High Court for a final sequestration - the act of taking possessions in order to pay for debt - against Julius Malema.
 
He has also been presented with an additional R14 million tax bill, on top of the original amount he was served with in 2012.
 
If the High Court grant SARS final sequestration against Malema, reports claim that he could be expelled from Parliament.
 
Rossouw explained: “If Malema is found guilty of misconduct by a Court, it implies (depending on the nature of the misconduct) that he can no longer serve in Parliament.  This does not apply for as long as he is accused of misconduct, it only applies once proven.”
 
Rossouw goes on to point out that Section 42 of the Constitution which states that a person can only become or remain a member of the National Assembly if they are a South African citizen. They may also not become or remain a member if:
 
“(a) at the time of the first election of the National Assembly held under this Constitution is serving a sentence of imprisonment of more than 12 months without the option of a fine;
 
“(b) at any time after the promulgation of this Constitution is convicted of an offence in the Republic, or outside the Republic if the conduct constituting such offence would have constituted an offence in the Republic, and for which he or she has been sentenced to imprisonment of more than 12 months without the option of a fine, unless he or she has received a pardon”.
 
Malema and SARS: the history
 
Malema has been having issues with SARS from September 2012, when SARS obtained a judgement from the High Court of South Africa in Pretoria “confirming an outstanding tax debt by Mr JS Malema of R16.2 million.”
 
Following this, on 10 February 2014, the Gauteng North High Court granted SARS a provisional sequestration order against Malema for the tax debt that he owed.
 
A date for the confirmation of a final order was set for 26 May of that year. On 26 May 2014, the provisional sequestration order was extended.
 
In a press statement on 16 March 2015, SARS stated: “Today’s application by SARS in the High Court of South Africa Gauteng Division, Pretoria, was for the sequestration order to be made final. The matter is due back in court on 1 June 2015.”
 
In May of last year SARS and Malema came to an agreement where the R18 million tax bill that was owed at the time was reduced to R7.2 million.
 
This agreement has since collapsed, as Times Live reported that “the taxman has accused Julius Malema of lying about the source of his income and has slapped him with an additional R14 million tax bill.”
 
Where does the money come from?
 
With such a hefty tax bill to be, where has the money come from?
 
Malema reportedly auctioned off his homes and other assets in 2013, enabling him to pay SARS R3.2 million
 
In addition to the sale of property, the Julius Sello Malema Trust was also established to assist in paying off Malema’s tax bill.
 
The website states: “The main motivation for the establishment of this entity is noted as an intention to settle the alleged tax bill that Julius Malema was handed by state agency South African Revenue Services (SARS).
 
“The trust is committed to advancing its cause by soliciting donations to help any needy member(s) and or organisations of South African society as it deems fit, in pursuit of socio-economic justice and restoration of the dignity of vulnerable individuals and members of South African citizenry.”
 
However, according to Times Live, “SARS lawyer Pieter Engelbrecht says they investigated the tax status of the trust and discovered that it had not been registered as a taxpayer and had not declared any donation tax.”
 
Furthermore, Engelbrecht noted: “In any event, it appears on scrutiny of the trust deed of the Julius Sello Malema Trust that the respondent is, in fact, not a beneficiary of the trust and that the trust was not formed in order to assist him to pay his taxes. It was formed for public benefit purposes.”
 
There have been allegations is the media that Malema has used EFF funding in order to pay some of the money that he owes SARS.
 
Professor Jannie Rossouw, head of the School of Economics and Business Sciences at the University of the Witwatersrand (Wits), said: “Naturally this allegation still has to be proven, but if proven it will raise questions about Malema’s integrity and suitability as party leader.  The allegations will not have any immediate impact on his position as party leader (Commander-in-Chief), as the EFF is currently structured around his image as a strong and decisive leader.”
 
He added: “[Recent] expulsions of members of the EFF gives the impression of a party at war with itself and reminds of the early months of Cope after the first general election in which it participated.  In the long run such misappropriation of funds (if proven) will do the EFF damage and will result in contused in-fighting that does not bode well for the party’s long-term growth prospects.”
 
In response to a request for comment, SARS said: “In line with the provisions of Section 69 of the Tax Administration Act SARS does not divulge specific information relating to the tax affairs of any taxpayer. We regret therefore that we cannot provide any information on your query.”

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