Since the enactment of the Tax Administration Act (TAA) the South African Revenue Services (Sars) has tightened the screws to encourage taxpayer compliance. A number of new penalties are being introduced to ensure taxpayers are compliant and their tax affairs are in order.
For taxpayers who have been charged with administrative non-compliance penalties, there is a light at the end of the tunnel as set out in Section 216 – 218 of the TAA. In this regard, there are three remittance scenarios that can apply to a taxpayer.
1. Remittance of a penalty raised for the failure of registration as a taxpayer as and when required:
In this instance the penalty can be waived in whole or in part by Sars, if the taxpayer voluntarily approached Sars and disclosed the failure to register as a taxpayer or, has filed all the returns required under a tax Act.
2. Remittance of a penalty raised for nominal or first incidence of non-compliance:
For the remittance of the above mentioned penalty to apply the following will have to be considered:
First incidence: A penalty has not been imposed in the past 36 months.
If a penalty has been imposed by Sars in respect of a first incidence of non-compliance in terms of:
I. section 210 (failure to comply with the obligation under a tax Act),
II. section 212 (reportable arrangement penalty),
III. section 213 (percentage based penalty),
of the TAA or an incidence of non-compliance as described in section 210 of the TAA and, the duration of the non-compliance is less than 5 business days, Sars may remit the penalty raised. It will be considered by Sars to remit the penalty or a portion thereof up to an amount of R2 000.
Sars has to, however, be satisfied reasonable grounds for the non-compliance exists and the non-compliance has been remedied for the penalty raised in terms of section 210 and 212 to be remitted. In the case of a penalty raised under section 212 of the TAA, the R2 000 limit will be increased to R100 000.
In terms of a penalty raised under section 213 of the TAA, Sars may remit the penalty or a part thereof if satisfied the penalty;
I. was imposed in respect of a first incidence,
II. involved a penalty of less than R2 000,
III. reasonable grounds for the non-compliance exist,
IV. the non-compliance has been remedied
3. Remittance of a penalty in exceptional circumstances:
An administrative non-compliance penalty raised may be remitted by Sars if exceptional circumstances exist. Exceptional circumstances considered by Sars include:
· a natural or human-made disaster
· a civil disturbance or disruption in service
· a serious illness or accident
· serious emotional or mental distress
· any of these acts by Sars
– capturing error
– processing delay
– provision of incorrect information in an official publication or media release issued by the Commissioner
– delay in providing information to any person
– failure by Sars to provide sufficient time for an adequate response to information required by Sars
· serious financial hardship which
– in relation to an individual refers to the lack of basic living requirements
– in relation to a company means an immediate danger to the continuity of business operations and the continued employment of its employees
It is becoming more evident that Sars is using the TAA to enforce tax compliance by all taxpayers and it will be difficult for taxpayers who are non-compliant to ask for remittance of penalties raised.
The request for remittance can be done via e-filing or at a Sars branch. The outcome of Sars on the remittance of the penalties is subject to objection and appeal under Chapter 9 of the TAA.