Don’t be late! SARS now issuing penalties for overdue tax return submissions

You can be late for work, late for a meeting or late for a date, just don’t be late with your tax return submission to the South African Revenue Service (SARS)! Starting from 1 December 2022, individuals and companies are now liable to rack up administrative penalties for the late submission of their tax returns. Here’s what you need to know about SARS penalties for late submissions and how to avoid them.

What is a SARS admin penalty?

Administrative penalties, also known as admin penalties, are fines imposed under section 210 of the Tax Administration Act. This Act outlines specific instances of non-compliance that are subject to a fixed amount of administrative penalties.

For individuals (personal income tax): As of 1 December 2022, a natural person who fails to submit an income tax return for the years 2007 onwards, with one or more outstanding returns, may be liable for administrative penalties. Previously, taxpayers were only subject to penalties if they had two or more outstanding tax returns for these years.

For companies (corporate income tax): penalties will be imposed if the company fails to submit an income tax return as required by the Income Tax Act for the years of assessment ending in 2009 and subsequent calendar years. This applies when SARS issues a final demand to the company, referring to the public notice and requesting the submission of the outstanding income tax return. If the company fails to submit the return within 21 business days of the final demand’s issuance, penalties will be imposed.

How to avoid penalties for late tax return submissions in South Africa

The only way to avoid penalties for late submissions is to submit your tax return before the deadline. If you already have overdue returns, it is advisable to submit them as soon as possible to prevent further administrative penalties from stacking up. The penalty will continue to add up monthly for each month the return remains outstanding, up to a maximum of 35 months.

How much is the SARS admin penalty?

The amount of the administrative non-compliance penalty depends on your taxable income and can range from R250 up to R16 000 per month.

• Each recurring penalty will be assigned a unique transaction number.
• SARS no longer sends out Penalty Statement of Account (APSA) with penalty assessment notices, you will have to request this through eFiling.

Request for Remission from SARS

What happens if you disagree with an admin penalty imposed by SARS? You’ll have to make a Request for Remission (RFR). This is a formal request to waive or reduce a penalty that has been imposed. RFRs can be submitted for a variety of penalties, including late payment penalties, administrative penalties, and interest.

To submit an RFR, you must complete a Request for Remission form (available on eFiling) and provide detailed information about the circumstances that led to the non-compliance. You must also explain why you believe the penalty should be waived or reduced.

SARS will consider all RFRs on a case-by-case basis. The factors that SARS will consider include your compliance history, the severity of your non-compliance, and your explanation for the non-compliance.

• If SARS grants an RFR, the penalty will be waived or reduced.
• If SARS denies an RFR, you may still appeal the decision.

Here are some of the reasons why SARS might grant an RFR:

• You made a genuine mistake
• You took steps to correct the non-compliance as soon as possible
• You have a good compliance history

Here are some of the reasons why SARS might deny an RFR:

• You were aware of the law and willfully failed to comply
• You have a history of non-compliance
• You did not take steps to correct the non-compliance.
• Your explanation for the non-compliance is not credible.

If you are denied an RFR, you may appeal the decision. To appeal a decision, you must file an appeal with SARS within 30 days of the date of the decision.

How do you pay your SARS admin penalty?

Admin penalties can be paid through the various SARS payment channels. If you are unable to settle the admin penalty debt immediately, you can request to make a payment arrangement with SARS.

What happens if you don’t pay your SARS admin penalty?

Failure to pay the admin penalty may lead to SARS appointing an agent (such as your employer) to collect the outstanding amount on its behalf. SARS has the authority to appoint any person to pay any outstanding tax out of any money held on behalf of a taxpayer.

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