13 July 2021 – Introduction of penalties for PAYE
The penalty for late filing of a Pay-As-You-Earn (PAYE) reconciliation was introduced for the first time this year. However, we are still in the process of enhancing our Dispute Resolution process so that this penalty can be disputed separately from a PAYE late payment penalty.
In the event that you receive another PAYE penalty for the same tax period, you will not yet be able to do a Request for Remission or lodge an Objection against the added penalty on eFiling when your prior Request for Remission or Dispute has already been finalised.
Our enhancements to the Dispute Resolution process should be ready soon, but in the event that you wish to do a Request for Remission or Dispute in relation to such an added penalty, SARS will as an interim measure accept a written Request for Remission or ADR1/ADR2 forms in relation to the added PAYE penalty.
To make use of the interim process to submit a Request for Remission, Notice of Objection or Notice of Appeal, please follow these steps:
Check on eFiling that the penalty amount for which you wish to request remission, object or appeal against is indeed blocked from being submitted. If eFiling blocks you then proceed to Step 2.
Type or write a Request for Remission, and make sure that you include the reason for your request as well as the PAYE reconciliation period or transaction numbers of the penalties incurred or the EMP201 periods. Before you do all of this please visit the Request for Remission of Administrative Non-compliance penalty webpage to understand the legislative requirements.
If you already submitted a Request for Remission but you remain aggrieved by the outcome then use the ADR1 form in the case of an objection. If you already objected and the objection was dismissed, and you wish to appeal, then use the ADR2 form. The ADR1 and ADR2 forms can be downloaded here https://www.sars.gov.za/find-a-form/.
Submit your Request for Remission, ADR1 or ADR2 to [email protected] or [email protected]. You will receive a case number which must be used in any future correspondence with SARS relating to this matter.
Once we have considered the request for remission, objection or appeal, SARS will notify you by way of a letter addressed to your preferred channel of communication.
What is it?
If you are aggrieved by an assessment issued by SARS, you have the right to object to such an assessment. You do not have the right to object to a self-assessment (like Value-Added Tax (VAT) and Pay-As-You-Earn (PAYE), where no assessment has been raised by SARS.
You can also object to the imposition of certain other administrative non-compliance penalties or interest where your request for remission of such penalty/interest was not allowed or partially allowed. Example:
- Late payment penalties for VAT, PAYE, Unemployment Insurance Fund (UIF) and Skills Development Levies (SDL);
- Late payment penalties on provisional tax;
- Late payment interest on provisional tax;
- Late payment interest on VAT and PAYE (not UIF or SDL);
You also have the right to object against the imposition of other tax related penalties. Example:
- Understatement penalties;
- Tax free investment penalty;
- Employment Tax Incentive (ETI) sectorial wage penalty;
- ETI displacement penalty;
- Reportable Arrangement Penalty;
- Underestimation penalty (Par 20);
- Non-submission of provisional taxpayer (Par20A), etc.
You do not have the right to object to the imposition of certain statutory interest. Example:
- Late payment interest on UIF and SDL;
- Late payment interest on income tax, etc.
Where an additional assessment was raised after a verification or audit by SARS to disallow the input tax on an invoice that was not considered to be a valid tax invoice per section 20(4) of the Value-Added-Tax Act No. 89 of 1991 (VAT Act), and the vendor subsequently obtains the valid tax invoice from the supplier; such vendor cannot object to the additional assessment raised by SARS. Such vendor can claim the input tax on the valid tax invoice in the period where the valid tax invoice is obtained, provided that it is claimed within 5 years from the date on which the tax invoice should have been issued for that supply (Section 16(3) proviso (i) of the VAT Act).
When can I lodge an objection?
An objection must be submitted within 30 business days after the date of the assessment or SARS decision.
Where the taxpayer requested reasons for the assessment, the objection must be submitted within 30 business days after:
- The date of the notice sent by SARS that adequate reasons have been provided and that no further reasons will be provided; or
- The date SARS provided you with the reasons/further reasons.
How do I lodge an objection?
Tax Types: CIT, PIT, PAYE and VAT
An automated dispute management workflow process exists for the abovementioned tax types. The dispute form to utilise is the Notice of Objection (DISP01), which can only be submitted as follows:
- Via eFiling;
- At a SARS branch nearest you (click here to make an appointment)
The DISP01 cannot be emailed or posted to SARS. Only the electronic submission via eFiling or at the SARS branch is allowed. When submitting the dispute via eFiling, please take note of the following:
eFiling Guided Process: To assist taxpayers in following the correct dispute sequence and complete all required information, eFiling entails a guided process. The eFiling guided process ensures that the dispute is submitted according to legislative requirements and thereby eliminating any possible invalid disputes from being submitted to SARS.
Why should I submit my dispute via eFiling?
- The automated dispute management process has a wide range of benefits that will make managing tax affairs more efficient and these include:
- The ability to lodge disputes including Request for Remission (RFR), Request for Reasons (RFRE), Notice of Objection (NOO) and Notice of Appeal (NOA) on eFiling platform or at your nearest SARS branch.
- The ability to Request suspension of payment via eFiling or at the nearest SARS branch.
- The ability to submit reasons for late submission of the Dispute via eFiling or at the nearest SARS branch.
- All dispute correspondence can be viewed at the click of a button, and where applicable, substantiating documents can be uploaded via eFiling or submitted at the nearest SARS branch.
- Taxpayers will have a consolidated view of all disputes lodged for Personal Income Tax (PIT), Corporate Income Tax (CIT), Value-Added Tax (VAT) and PAYE.
- Outcome letters for RFRs and NOOs, Request for late submission as well as Suspension of Payment are conveniently available on the taxpayer’s eFiling profile.
- The process provides the ability to dispute multiple periods on one dispute form up to a maximum of 12 periods for VAT and PAYE.
Top Tip: Remember to make an appointment if you need to visit a SARS Branch office.
Disputing interest and penalties:
- The following source codes must be utilised when disputing the imposition of certain interest/penalties:
- 9987 – Tax-free investment penalty
- 9990 – Underestimation of provisional taxpayer (Par20)
- 9991 – Non-submission of provisional taxpayer(Par20A)
- 9992 – Omission of Income
- 9988 – Underpayment of Provisional Taxpayer(89Q(2))
- 9993 – Late or Non-submission of tax return
Tax types: Other
A manual process is utilised to submit disputes for all other taxes excluding CIT, PIT, VAT and PAYE. The dispute form to utilise is the manual Notice of Objection (ADR1), which can be submitted:
- Via post;
- At the nearest SARS branch (click here to make an appointment); or
The ADR1 cannot be submitted electronically via eFiling.
When submitting the objection late:
Where the objection is submitted after the prescribed due date, the taxpayer must provide grounds (reasons) for the late submission. The grounds for the late submission will be considered first and only if a senior SARS official is of the view that reasonable or exceptional grounds existed, will the late submission be condoned. Where reasonable grounds exist for the late submission, SARS can only extend the period of submission of the objection by 30 business days. Where a senior SARS official is satisfied that exceptional grounds exist, SARS can further extend the period of lodging a notice of objection.
- Where the late submission is condoned, SARS will proceed to consider the grounds for the objection and inform the taxpayer accordingly.
- Where the late submission of the objection is not condoned, the grounds for the objection will not be considered and the taxpayer will be informed accordingly. The taxpayer has the right to then object against the decision to not condone the late submission of the objection and appeal where that objection is unsuccessful.
No objection can or will be allowed to be submitted more than 3 years after the date of the assessment or the SARS decision taken or if the grounds for the objection is based wholly or mainly on a change in a practice generally prevailing which applied on the date of the assessment or decision taken.
Grounds for the objection:
When completing the dispute form the taxpayer must take care in ensuring that the grounds for the objection is detailed and includes the following:
- The part or specific amount of the disputed assessment. Example: The taxpayer needs to indicate (where applicable) the source code or description of the specific item and the amount he/she wishes to dispute.
- The part of the grounds of assessment that are disputed. Example: The reason as to why the assessment is considered incorrect.
- The documents required to substantiate the grounds of objection that the taxpayer has not previously delivered to SARS for purposes of the disputed assessment. Example: SARS disallowed the input VAT claimed because no tax invoice was provided during the verification/audit. The objection to such disallowance needs to include the valid tax invoice in order for SARS to apply its mind to the grounds for the objection.
What can I expect from SARS when I object?
SARS will endeavour to:
- Notify the taxpayer if the objection is considered to be invalid and provide the ground(s) for the invalidity within 30 business days from the delivery of the invalid objection;
- Notify the taxpayer if any additional substantiating documents are necessary to decide on the objection within 30 business days after the delivery of the objection.
What can I expect when the objection is finalised?
SARS will endeavour to:
- Notify the taxpayer of the allowance or disallowance of the objection and the basis thereof within 60 business days after the delivery of the objection;
- Where SARS requested supporting documents, 45 business days after:
- The delivery of the requested documents; or
- If the documents were not delivered, the expiry of the period within which the documents should have been delivered.
- Where SARS requested supporting documents, 45 business days after:
- Notify the taxpayer if the decision on the objection will take longer than the above specified due date where a senior SARS official is of the view that more time is required as result of exceptional circumstances, the complexity of the matter, the principle involved or the amount involved. Such notification will be issued before the expiry of the 60 business days.
Where the objection is allowed (partially or in whole), SARS will issue a revised assessment to reflect the outcome of the objection. A Notice of Assessment (Example: ITA34, VAT217, EMP217, etc.) will be issued in due course.
Where the objection was in the form of a DISP01, the Notification of the outcome of the objection and the Notice of Assessment (where applicable) will be made available on eFiling.
Where the objection was in the form of an ADR1, the Notification of the outcome of the objection and the Notice of Assessment where applicable) will be made available manually via email/post.
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