What is an Administrative Penalty?
An administrative penalty (“admin penalty”) is a penalty levied under section 210 of the Tax Administration Act (TAA). The TAA prescribes the various types of non-compliance which are subject to fixed amount administrative penalties.
Incidences of non-compliance subject to a fixed amount penalty:
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.
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:
- eFiling for registered eFilers
- By calling the SARS Contact Centre on 0800 00 SARS (7277)
- At a SARS branch. (Remember to make an appointment)
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?
A 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.
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 on the prescribed RFR form, it must include:
- A description of the circumstances which prevented the person from complying with the relevant obligation;
- Each period and amount; and
- Transaction code as received on the Penalty assessment letter.
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:
- eFiling
- SARS Branch nearest you (click here to make an appointment)
Only in exceptional circumstances as described above will a manual request form be accepted to [email protected] or [email protected].
How do I pay my Penalty or Interest?
You can pay using one of the available payments channels. Please Note:
- If you can’t make a full ‘once off’ payment you can request a deferred arrangement with SARS.
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 |
Administrative Penalties for PAYE
The Dispute Resolution process has been enhanced so that the 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 now be able to do a Request for Remission or lodge an Objection against the added penalty on eFiling.
Please note that from 25 April 2022, SARS will no longer accept manually filed PAYE disputes and penalty remission requests. The PAYE request for remission or dispute process for Administrative penalties is now available on the existing eFiling platform. Employers can now dispute late payment penalties and administrative penalties online. Click here to access the guide.
