Written By Angela Paschalides, Candidate Attorney and Chantelle Gladwin-Wood, Partner
In an attempt to alleviate the far-reaching consequences of the COVID-19 pandemic on the dwindling fiscus, the South African Revenue Service (“SARS”) has embarked on a revision of certain key aspects of the personal income tax filing procedure for the 2020 season.
This article will consider the key changes that have been implemented by SARS and will outline the administrative penalties imposed in terms of Section 210 of the Tax Administration Act 28 of 2011 (the “Act”) for non-submissions of tax returns in respect of individuals.
Changes to Filing Season
In a media briefing earlier this year, SARS commissioner, Edward Kieswetter, announced the implementation of a complete restructure to the SARS filing system. Effectively, the 2020 filing season for personal taxes would occur in 3 phases. The first phase took place from 15 April 2020 to 31 May 2020 and was allocated to employers and other third-party data providers, such as banks, insurance companies and medical schemes (“Phase One”).
The second phase took place from 1 June 2020 to 31 August 2020, during which taxpayers were granted the opportunity to change and update their personal information on the SARS system. Further, based on the information provided in Phase One, SARS issued ‘auto-assessments’ to individual taxpayers. These ‘auto-assessments’ included a draft assessment of the taxpayer’s tax return. For those that accepted the draft assessment, there would be no need to file a further tax return (“Phase Two”).
The final phase of the filing system has now commenced and will run from 1 September 2020 to 29 January 2021. This phase will allow those taxpayers who have not been assessed or who have not accepted an ‘auto-assessment’, to file their tax returns via digital platforms and for those who cannot do so digitally, branch visits will be allowed by appointment only (“Phase Three”).
Failure to Submit Tax Returns
In terms of Phase Three, the closing date for taxpayers who elect to file at a SARS branch will be 22 October 2020, for those making use of the digital platforms, 16 November 2020 and 29 January 2021 for all provisional taxpayers who file electronically.
Individuals required to submit a tax return, but who fail to do so timeously, will be required to pay an administrative penalty. An administrative penalty is a penalty levied under section 210 of the Act. The Act prescribes fixed administrative penalties for various forms of non-compliance and explains in section 210(2) that, “non-compliance is failure to comply with an obligation that is imposed by or under a tax Act…”
The administrative penalty for non-compliance includes fixed amount penalties and is calculated per incidence of non-compliance. These fixed amount penalties can be found in the ‘Fixed amount penalty table’ under section 211 of the Act. The amount of the penalty is based on the taxpayer’s assessed loss or taxable income for the preceding year and can range from R250.00 to R16 000.00 a month. The penalty will reoccur every month that the return/s remain outstanding, for a maximum of 35 months.
Procedure for Imposing Penalty
Section 214 of the Act prescribes that a penalty must be imposed by way of a ‘penalty assessment’ and if made, SARS is required to give notice of such ‘penalty assessment’ to the non-compliant taxpayer. Section 214(1) provides that such notice must include the following information:
- the non-compliance for which the penalty is assessed and its duration;
- the amount of the penalty imposed;
- the date for paying the penalty;
- the automatic increase of the penalty; and
- a summary of the procedures for requesting remittance of the penalty.
The penalty must be paid by the taxpayer on or before the date for payment stipulated in terms of point ‘c’ of the ‘penalty assessment’ notice.
Remittance of Penalty
In the event that a taxpayer chooses to dispute an administrative penalty levied for non-compliance, a request for remission may be submitted wherein the taxpayer must provide reasons for their non-compliance. Section 215(2) of the Act provides that a ‘remittance request’ must include:
- a description of the circumstances which prevented the person from complying with the relevant obligation under a tax Act in respect of which the penalty has been imposed; and
- the supporting documents and information as may be required by SARS in the prescribed form.
It is vitally important that South African taxpayers take advantage of new innovations that make complying with their tax obligations simpler and faster. As SARS commissioner, Edward Kieswetter, reiterated, “now, more than ever before, taxpayers need to remain compliant”.
It is advisable that taxpayers comply with all the relevant tax return submission deadlines as outlined above. Maintaining a status of compliance with SARS will ensure that no administrative penalties are levied against you, thus actually saving you money in the grand scheme of taxes. Should you require assistance in ensuring your compliance this filing season, we strongly recommend seeking advice from a professional tax consultant.
Please note: this article is for general public information and use. It is not to be considered or construed as legal advice. Each matter must be dealt with on a case by case basis and you should consult an attorney or tax consultant before taking any action contemplated herein.