If like most South Africans, tax is the last thing on your mind right now, it’s not surprising, what with Christmas literally weeks away! But, unfortunately, the South African Revenue Service (SARS) has decided the festive season is the ideal time to implement new penalties for late submission of tax returns in South Africa! These came into effect as of December 1st, 2022, which may feel pretty scrooge-like to those who don’t have their tax affairs in order!
What is an administrative penalty?
Firstly, what even is an administrative tax penalty? Administrative tax penalties are applied according to section 210 of the Tax Administration ACT (TAA), which stipulates the different forms of non-compliance regarding tax that are liable for fixed administrative penalties. In other words, penalties for late tax returns are fees charged to taxpayers by SARS if they don’t submit their tax returns on time and pay the taxes owed.
For most of us in traditional forms of employment, tax is deducted from our monthly salaries. However, for self-employed individuals or those earning their income from other avenues (rental income or investments, etc.), submitting an annual tax return is the norm, as is the mad panic to submit their tax returns on time. Of course, previously, there was a little elbow room for late submissions of these pesky tax returns; however, this has now changed!
What were the old penalties?
Previously penalties were imposed for non-submission of tax returns in respect of the following:
- South African taxpayers failing to submit two or more tax returns as stipulated by the Income Tax Act for tax assessment years beginning on or after 1 March 2006.
What are the new penalties?
According to SARS, aka straight from the horse’s mouth, the below changes have now come into effect from 1st December 2022, and penalty fees will be applied if:
- Individuals (Personal Income Tax)
“ From 1 December 2022, if a natural person failed to submit an income tax return for years of assessment from 2007 onwards when that person has one or more income tax returns outstanding.”
- Companies (Corporate Income Tax)
“ Penalties will be imposed where the company has failed to submit an income tax return as and when required under the Income Tax Act for years of assessment ending during the 2009 and subsequent calendar years, where SARS has issued that company with a final demand referring to the public notice and requiring the submission of the outstanding income tax return, and the company failed to submit the return within 21 business days of the date of issue of the final demand.”
In a proverbial nutshell, this means that from December 1st, non-compliance tax penalties will be applied to ALL outstanding income tax returns for assessment years starting on or after March 2006.
What happens if you don’t submit a tax return
South African tax residents who neglect to submit their tax returns on time will be charged a monthly administration penalty fee which is payable directly to SARS for each month the tax return is outstanding. These penalty charges will continue to be applied until the missing tax return is submitted or continue for a maximum of 35 months. According to the SARS website, even if the taxpayer disagrees with the penalty fee, it’s best to submit the outstanding return to stop additional charges from being applied.
Once the tax return is submitted, the taxpayer is entitled to dispute the penalty fee using the RFR (Request for Remission) form and supply valid reasons for their non-compliance. SARS will then review the request and either approve or disallow it. If the taxpayer disagrees with the outcome, they can object and appeal the decision.
What are the administrative non-compliance penalty fees?
After all this talk about penalty fees, you probably want to know how much not submitting your tax return on time will cost. The truth is penalties for late submission of tax returns in South Africa can be quite chunky and range from R250 up to R16,000 per month for every month the tax return remains outstanding. Of course, the penalty fees you will be charged depend on your taxable income, but this can add up very quickly!
How to pay your admin penalty
If you have missed submitting your tax return in time, you will most likely have had a penalty fee applied. Firstly, to avoid further penalty fees, get your tax return submitted as soon as possible! Next, determine whether you have a valid reason for your non-compliance and if you can reasonably appeal the penalty fee; if not, it’s time to pay up. You can pay SARS using the following methods:
- EFT (Electronic Transfer) – internet banking
- At a SARS Customs branch
- SARS MobiApp
- eFiling
- Associated banks (Nedbank, Absa, FNB, Standard Bank, Capitec)
If you don’t pay your administrative penalty fee, SARS will appoint an agent (third party) to collect the payment from you. For example, your employer or bank.
Final thoughts
When it comes to tax returns and penalties for late submission of tax returns in South Africa, it’s a simple case of rendering unto Caesar what is rightfully Caesars’ or, in this case, rightfully SARS! So keep an eye on those tax deadlines and ensure your tax return is ready to send on time to avoid those costly penalty fees!
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