SARS Can Freeze and Direct-Debit Money From Bank Accounts, the High Court Rules
- A Johannesburg High Court ruling confirmed SARS has the power to freeze funds held in a third-party bank account
- The case involved a company that fraudulently obtained a VAT refund and transferred the money to another individual
- The judgment expanded what many South Africans understood about SARS's reach into commercial banking
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On 8 September 2026, the Johannesburg High Court has ruled that the South African Revenue Service can legally seize funds from a bank account without first issuing a final demand to the account holder. The case, Cuba Dumakude v Bidvest Bank, centred on a company that used fraudulent invoices to illegally obtain a VAT refund from SARS.
Once the money landed, it was quickly moved into another individual's account, apparently to put it beyond SARS's reach. SARS responded by issuing a third-party notice directly to Bidvest Bank, instructing the institution to hand over the funds. The bank challenged the instruction, and the matter ended up before the High Court.
What section 179 of the Tax Administration Act means for you
The court upheld SARS's action, finding it lawful under section 179 of the Tax Administration Act. This provision allows the revenue collector to go directly to a bank or any other third party holding money linked to a tax debt, and demand that those funds be frozen or handed over.
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Critically, the judgment confirmed that SARS does not need to issue a prior final demand before taking this step. Where there is a credible risk that money could be moved or spent before a tax debt is settled, SARS is entitled to act swiftly and without advance notice.
The "Followed Money" principle
The ruling effectively endorsed what tax practitioners call the "followed money" approach. SARS can trace funds that originated as part of a fraudulent or disputed tax transaction, follow them into a third-party account, and instruct the bank holding those funds to act on its notice.
This means that even a person or business that did not directly deal with SARS could find their bank account affected if money linked to a tax matter passed through it.
For ordinary South Africans and small business owners, the judgment is a reminder that SARS's statutory powers extend well beyond sending letters. Banks are legally obligated to comply with third-party notices, and account holders may only learn about the action after funds have already been frozen. The ruling reinforces that the burden of proving innocence in such matters falls on the account holder, not on SARS, once a notice has been issued and upheld.
3 Briefly News tax-related articles
- A viral tax breakdown reveals that middle-class South Africans earning R30,000 monthly carry an effective tax and service burden of nearly 50%, putting their overall expenses on par with Germany's top earners.
- A South African online shopper sparked widespread discussion after sharing that she was charged a R9,000 customs fee on her massive Shein delivery.
- A payslip shared by salary reviewer Boni Xaba revealed that a Senior Data Engineer earning a basic salary of R128,000 monthly faced total tax deductions exceeding R42,000, driven primarily by PAYE income tax.
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Source: Briefly News
