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 |
