Monday 12 November 2018

Late Submission of Tax Returns

Filing season for non-provisional individual taxpayers ended on 31 October 2018. 

Those taxpayers who failed to meet the deadline face the risk of being subjected to administrive penalties for the late submission of returns. The penalties are based on the taxpayer’s level of taxable income and the number of months that the tax return is overdue.

The administrative penalty is determined according to the table set out below:

Assessed loss or taxable income for ‘preceding year’ ‘Penalty’
Assessed loss                                                                           R 250
R0-R 250 000                                                                            R 250
R250 001-R500 000                                                                 R 500
R500 001- R 1 000 000                                                           R 1 000
R 1 000 001-R 5 000 000                                                       R 2 000
R 5 000 001- R 10 000 000                                                    R 4 000
R 10 000 001- R 50 000 001                                                  R 8 000
Above R 50 000 000                                                               R 16 000

Where the South African Revenue Service is in possession of the taxpayer’s current address and is able to deliver the assessment, the penalty can be imposed for 35 months from the date of the assessment. Where SARS is not in possession of the taxpayer’s address the penalty can be imposed for up to 48 months.

For example, where a taxpayer has a taxable income of R 400 000 and has failed to submit a tax return for 34 months the administrative penalty will amount to R 17 000. It must be remembered that the penalty is levied for each annual tax return that is filed late.

Thus, those taxpayers who choose to delay submitting the submission of their tax returns can face a nasty surprise when SARS imposes the administrative penalty for the late submission of tax returns.

Individual taxpayers who choose to delay submitting the submission of their tax returns can face a nasty surprise from Sars.
Image bought from i-Stock Stock photo ID:479528416  nd3000

Initially, the administrative penalty only applied to the late submission of tax returns by individual taxpayers. SARS announced recently that with effect from December 2018 the administrative penalty would apply to the late submission of company tax returns well.

Thus, those companies which have tax returns outstanding from 2009 can face the administrative penalty as per the table set out above. The greater the company’s taxable income the higher the penalty will be.

Besides the administrative penalty, the failure to file a tax return constitutes an offence under the Tax Administration Act. Section 234(d) of the Tax administration Act provides that upon a conviction for the failure to submit a tax return, the taxpayer may be subjected to a fine or a period of imprisonment not exceeding two years.

Recently, SARS has been pursuing high profile celebrities who have failed to file their tax returns on time. Once the defaulting taxpayer has appeared in court, they can be named and photographs can appear in the press. SARS no doubts hopes that by targeting celebrities it will act as a deterrent to other non-compliant taxpayers.

Taxpayers need to submit their tax returns within the time allowed, failing which they will be subject to the administrative penalty and could also face a criminal prosecution which can result in a criminal record.

Dr Beric Croome is a Tax Executive  at ENSafrica. This article first appeared in Business Day, Business Law and Tax Review, November 2018.


The November 2108 Business Day Business Law and Tax Review is the last for the year. 
Columns will resume in February 2019. 
Thank you for your support during the challenges of the past year.