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 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. 

May I request for a Penalty 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; 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:

• eFiling
• SARS Branch.

No manual request or ADR1 form will be accepted.  

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.  

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

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