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Request for Remission of Administrative Non-compliance Penalty

What is an Administrative Penalty?

An Administrative Penalty (Admin. Penalty) is a penalty levied under Section 210 of the Tax Administration Act (TAA). The Act prescribes the various types of non-compliance which are subject to fixed administrative penalties.

Currently the penalty is imposed only for non-submissions of tax returns in respect of individuals and companies:

  • For individuals the penalty will be imposed where the taxpayer has failed to submit a return as and when required under the Income Tax Act for years of assessment commencing on or after 1 March 2006 where that person has two or more outstanding income tax returns for such years of assessment; and
  • For companies the penalty 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.

Taxpayers who do not submit their tax returns will be charged an admin. penalty which must be paid over to SARS.

Top Tip: Regardless of whether you agree or disagree with the admin. penalty it is advisable to submit the outstanding return to stop further admin. penalties. The penalty will reoccur for every month the return(s) remains outstanding for a maximum of 35 months. 

The administrative non-compliance penalty for the failure to submit a return comprises fixed amount penalties based on a taxpayer’s taxable income and can range from R250 up to R16 000 a month for each month that the non-compliance continues.

Administrative penalties recur each month that the taxpayer is non-compliant, up to a maximum of 35 months. Each recurring penalty will have a unique transaction number.

Note: The Penalty Statement of Account (APSA) will no longer be sent with the penalty assessment notice. The taxpayer can request an APSA:

 

When are Penalties imposed?

Penalties can be imposed due to non-compliance of a tax obligation under a tax Act; or is listed in a Public Notice issued by the Commissioner of SARS.

Fixed amount penalties are levied for outstanding returns and/or the failure to disclose information in respect of a ‘reportable arrangement’.  A percentage based penalty will be imposed when a payment is received late.

To prevent a payment from being received late the payment must be received into the SARS bank account on or before the due date.

SARS will only recognise a payment once it is received into the SARS bank account:

  • Any payment received into the SARS bank account after the due date will be regarded as a late payment.
  • Taxpayers have to ensure that payment is made before the cut-off time of the relative bank product used to ensure that funds will reflect in time into the SARS bank account. 
  • Should the payment due date fall on a Saturday, Sunday or public holiday then payment must be received on the Friday or the day before the public holiday.  

What if I don’t agree with the Penalty?

Request for Remission (RFR) form can be submitted when a taxpayer disputes any penalty levied due to non-compliance. A Request for Remittance may be submitted to SARS on a prescribed form or in writing, and must include:

  • A description of the circumstances which prevented the person from complying with the relevant obligation;
  • Each period and amount; and
  • Supporting documentation and information as required by SARS.

If the Request for Remission is disallowed or only partially allowed, you may still object to the decision made by SARS and even appeal the decision if you disagree with the outcome of the objection process.  Please note that you cannot use the objections process before the RFR is submitted and considered.  When SARS is dealing with the RFR/objection/appeal, partial repayment may be allowed which means certain transactions may be settled.

 

May I request for a Penalty and/or Interest to be remitted?

A Request for Remittance may be submitted to SARS in writing, it must include:

  • A description of the circumstances which prevented the person from complying with the relevant obligation;
  • Each period and amount; and
  • Supporting documentation and information as required by SARS.

How do I submit a Request for Remission for Penalty?

A Request for Remission for Penalty can only be submitted via the following two channels:

Only in exceptional circumstances as described above will a manual request form be accepted to [email protected] or [email protected]

Top tip: When requesting the remission for penalty on late payment for VAT, PAYE, SDL, UIF and Provisional tax, the following source code must be used: 9996 – Penalty.  

How do I pay my Penalty or Interest?

You can pay using one of the available payments channels.   Please Note:

What can happen if I don’t pay my Penalty or Interest?

SARS may appoint an agent (such as your employer) to collect the money on its behalf.

What are the conditions for the remittance of a penalty?

Penalties may be remitted under specific conditions and for different amounts.  

  NOMINAL OR FIRST INCIDENCE ON NON-COMPLIANCE  
Possible cases of remittance Conditions for remittance If requirements are met
Fixed amount penalties ·        First incidence of non-compliance; OR ·        If the duration of the non-compliance is less than five business days ·        Additional requirements if above two conditions are met: o    Reasonable grounds for non-compliance exist; AND o    Non-compliance in issue has been remedied.   Up to R2000 can be remitted  
Reportable arrangements   Up to R100,000 can be remitted  
Imposition of percentage based penalties   ·        First incidence of non-compliance; OR ·        Involved a penalty amount of less than R2000; AND ·        Reasonable grounds for non-compliance exists; AND ·        Non-compliance in issue has been remedied (the capital amount outstanding for the specific period has been paid) All penalties can be waived
  EXCEPTIONAL CIRCUMSTANCES  
Possible cases of remittance Examples If requirements are met
Natural or human made disaster ·        Theft/hijacking ·        Elements of nature (e.g. fire/floods); etc.   The whole penalty or a portion thereof.
Civil disturbance or disruption in service   ·        Strikes ·        Messenger/taxpayer could not drop off payment due to marches/riots; etc. ·        The bank experiences a technical problem for the day – the bank must provide the taxpayer with a letter confirming the technical error experienced  
Serious illness or accident    ·        Hospitalisation of business owner or representative ·        Person dealing with tax affairs was seriously ill and is the only person working with it ·        Serious accident Stroke, Death; etc
Serious emotional or mental distress   ·        Hospitalisation of business owner or representative ·        Physical disability Mental sickness; etc
Act by SARS (office error) ·        A capturing error ·        A processing delay ·        Provision of incorrect information in an official publication issued by SARS ·        Delay in providing information to any person ·        Failure by SARS to provide sufficient time for an adequate response to a request for information by SARS.  
Serious financial hardship ·        In the case of an individual, lack of basic living requirements; or ·        In the case of a business, an immediate danger that the continuity of business operations and the continued employment of its employees are jeopardised.  
Any other circumstance of similar seriousness  
  UNDERESTIMATION OF TAXABLE INCOME FOR PROVISIONAL TAX PURPOSES  
Possible cases of remittance Conditions for remittance If requirements are met
Submitted a provisional tax return Not deliberately or negligently underestimated Remit the whole penalty or portion of it
Did not submit a provisional tax return No intent to evade or postpone Remit the whole penalty or portion of it

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:

Step 1

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.

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 make sure you 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 disallowed, 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/.

Step 3

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.

Step 4

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.

 

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