November 18, 2022
South Africa | Overview of new administrative penalties for late submission of personal tax returns
Administrative penalties for late submission
This Tax Alert is a reminder that with effect from 1 December 2022, administrative penalties relating to the late submission of a personal tax return will be charged when one or more tax returns relating to the tax years 2007 and onwards are outstanding.
In previous years a penalty only arose if the taxpayer had two or more tax returns outstanding for these years.
On 17 November 2022, the South African Revenue Service (SARS) issued a Notice stating that they are aware that some taxpayers may have received administrative penalty letters/SMS’s in this regard, in error prior to the 1 December 2022 effective date. The Notice mentioned that SARS is investigating the communication and SARS apologizes for the inconvenience. Although the administrative penalties are allowed in terms of the Tax Administration Act No 28 of 2011 (TAA), SARS concedes that prior to 1 December 2022, the penalties should not have been levied where only one tax return is outstanding. This means that if a taxpayer with an outstanding return submits by 29 November, no administration penalty relating to late submission should have been applied.
An administrative penalty is a penalty levied under section 210 of the TAA. The penalty comprises of a fixed amount penalty based on a taxpayer’s taxable income and can range from R250 to R16,000 a month for each month that the non-compliance continues. This can reoccur up to a maximum of 35 months of non-compliance.
The Penalty Statement of Account (APSA) is no longer sent with the penalty assessment notice and the taxpayer must request the APSA on SARS’ e-Filing.
If the taxpayer does not agree with the penalty imposed, they can Request for Remission (RFR) which is done for all penalties levied for non-compliance. Reasons for non-compliance must be provided. If the RFR is denied, the taxpayer may still follow the objection and appeals processes. A settlement on partial payment may be reached with SARS.
For additional information with respect to this Alert, please contact the following:
Ernst & Young Advisory Services (Pty) Ltd., Johannesburg
Ernst & Young Société d’Avocats, Pan African Tax – Transfer Pricing Desk, Paris
Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London
Ernst & Young LLP (United States), Pan African Tax Desk, New York