Johannesburg 14 October 2009 - The South African Revenue Service (SARS) will introduce a system of strict new administrative penalties against non-compliant taxpayers from 23 November 2009.
In effect, taxpayers have until 20 November 2009 this year - the final deadline of the 2009 Tax Season - to submit any outstanding returns in order to avoid being penalised under the new penalty regime.
The Administrative penalty regulations legally came into effect on 1 January 2009 and provide for the imposition of penalties for a range of non-compliance, including failure to register as a taxpayer, failure to inform SARS of a change of address and other personal particulars, and failure to submit tax returns and other documents to SARS.
SARS delayed the effective implementation of the new penalties to allow sufficient time for taxpayers to rectify any non-compliance and for SARS to develop its own systems to automatically issue penalties for non-compliance.
The implementation date will be phased-in over a period of time, beginning on 23 November 2009 for taxpayers with outstanding income tax returns.
In the interest of fairness SARS will first impose the new penalties against repeat offenders - taxpayers who have failed to submit returns for multiple years.
SARS believes that it is only fair on the majority of compliant taxpayers, who meet their tax obligations and contribute willingly to our country's development, that tougher action against non-compliant taxpayers is needed.
It must be acknowledged that the existing penalty system that SARS applies is proving to be an inadequate deterrent for non-compliant behaviour. In 2007/08 more than 5.3 million returns due to SARS were outstanding and SARS had to institute legal action against 81 000 taxpayers.
The new penalty system, applicable in terms of Section 75B of the Income Tax Act (No. 58 of 1962), provide for recurring monthly penalties for each month that an income tax return is outstanding.
The penalty amounts are determined according to the taxpayer's taxable income and range from R250 a month for taxpayers with an annual taxable income of up to R250 000, to R16 000 a month for taxpayers with taxable income over R50 million. A full schedule of penalties is available on the SARS website, http://www.sars.gov.za/home.asp?pid=52276.
Taxpayers can object to the imposition of penalties by completing a Remission Request form and by providing any supporting documents as proof as to why penalties must not be imposed.
Assessed loss or taxable income for preceding year
R0 - R250 000
R250 001 - R500 000
R500 001 - R1000 000
R100 000 1 - R5 000 000
R500 000 1 - R10 000 000
R10 000 001 - R50 000 000
Above R50 000 000
Taxpayers with multiple outstanding returns after 20 November will be notified in writing or electronically (for registered eFilers) of the imposition of a one month penalty for each outstanding return. Should they fail to submit these outstanding returns within 30 days, a second penalty will be applied, and so on. The new regulations allow for penalties to be applied each month or part thereof for up to 35 months.
Where a taxpayer fails to pay their penalty, SARS will approach their employers, or other parties in control of their funds, to act as an agent in terms of Section 99 of the Income Tax Act. Such employers or third parties will be required to debit the outstanding amount from the defaulting taxpayer's salary or other funds and pay it over to SARS. Failure to act as an agent is a criminal offence.
Taxpayers penalised under the new regulations may apply for relief from the penalties if there were exceptional circumstances responsible for their non-compliance. Such applications will only be considered where the taxpayer has submitted the outstanding return/s.
Submitting Outstanding Returns
Taxpayers who have outstanding returns for prior years are required to submit returns for these years on the current (2009) ITR12 income tax return form and not on the original return. Taxpayers can obtain and submit an ITR12 return via SARS eFiling or by visiting a SARS branch.
More time for Provisional Taxpayers
To accommodate the anticipated increase in submissions of outstanding at branches and via eFiling over the final six weeks of Tax Season, SARS will allow additional time for provisional taxpayers who are in good standing with SARS (i.e. have not outstanding returns except for the current 2009 return) and who file via eFiling to submit their 2009 returns.
Those provisional taxpayers who choose to make use of the additional time have until 28 February 2010 to submit their returns.
Payment of assessed tax is due within seven calendar days after the assessment.
SARS has decided to allow more time for Provisional taxpayers to submit their returns as their returns are generally more complex and since they have a higher administrative burden of having to submit three returns per year. Given that provisional taxpayers generally make more use of practitioners, the differentiated submission date will also significantly assist practitioners.
Taxpayers wishing to check whether they have any outstanding returns can do so at any SARS branch or by calling the SARS Contact Centre at 0800 00 SARS (7277). For security purposes, they must have their ID number and tax reference number at hand when they call or visit.