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Understanding SARS Admin Penalties: A Comprehensive Guide
Have you ever wondered about the SARS admin penalties that South African Revenue Service (SARS) charges? In this blog post, we’ll discuss everything you need to know about these SARS Admin Penalties, from what they are to how they work and what to do if you incur them.
What are SARS Admin Penalties?
SARS admin penalties are charges that SARS imposes on taxpayers for non-compliance with tax laws or regulations. These penalties may arise from various non-compliance issues, such as late filing or payment of taxes, failure to submit a tax return, and incorrect or incomplete submission of returns.
There are two types of admin penalties: fixed amount penalties and percentage-based penalties.
Two types of SARS Admin Penalties
Fixed Amount Penalty
If you fail to submit your tax return on its due date, you’ll incur a fixed amount penalty. The amount of the penalty depends on your income, with penalties ranging from ZAR 250 per month to ZAR 16,000 per month. This penalty is charged every month until you rectify the non-compliance.
A fixed amount penalty is a specific type of penalty that is imposed on individuals or entities for failing to comply with certain obligations. In the case of tax returns, if you fail to submit your tax return by the due date, you will incur a fixed amount penalty.
The amount of the penalty varies based on your income and can range from ZAR 250 per month to ZAR 16,000 per month. This means that individuals with higher income levels will generally face higher penalties than those with lower income levels.
It’s important to note that the penalty is charged every month until you rectify the non-compliance. This means that if you fail to submit your tax return for several months, the penalty will accumulate, resulting in a larger penalty amount.
To avoid this penalty, it’s important to ensure that you submit your tax return on time. If you are unable to submit your tax return by the due date, you can request an extension from the South African Revenue Service (SARS) to avoid incurring the fixed amount penalty.
Percentage-Based Penalty
If you pay or make a payment to SARS late, you’ll incur a percentage-based penalty. The penalty is charged on the amount you owe, and the percentage varies depending on the number of days the payment is overdue.
The percentage-based penalty for late payment to SARS is calculated based on the number of days that the payment is overdue. The penalty rate is determined by SARS and is subject to change. Typically, the penalty rate ranges from 10% to 20% of the amount owed, with the rate increasing the longer the payment remains outstanding.
For example, if you owe ZAR 10,000 in taxes and the payment is 30 days overdue, you could incur a penalty of ZAR 1,000 to ZAR 2,000, depending on the current penalty rate set by SARS. If the payment remains overdue for an extended period, the penalty could increase significantly.
It’s important to note that if you are unable to pay your taxes on time, you should contact SARS as soon as possible to arrange a payment plan. This can help you avoid or minimize penalty fees and interest charges.
What Happens if You Don’t Pay?
If you don’t pay your penalties, SARS will send you letters of demand until a certain point where they will take legal action internally. In some cases, they may approach your employer and take the money from your salary directly. In severe cases, they may even go directly into your bank account and take money from it.
What Can You Do if You Incur SARS Admin Penalties?
There are several options available if you incur SARS admin penalties:
Pay the Amount Upfront
The first option is to pay the amount owed to SARS upfront. If you cannot afford to pay the full amount, you can apply for a payment arrangement.
Apply for a Payment Arrangement
If you can’t pay the full amount upfront, you can apply for a payment arrangement. SARS will review your application and either approve or decline it.
Request for a Revision
If you don’t agree with the admin penalties charged by SARS, you can request a revision. This process is called Request for a Remission (RFR). According to the tax administration act, SARS can review the charges and provide an outcome, either successful or unsuccessful.
What If I do not agree?
If you don’t agree with the administrative penalties charged by SARS, you have the right to request a revision of the penalties through the Request for Remission (RFR) process. This process allows you to ask SARS to reconsider the penalties that have been charged to you, and it can be initiated by submitting an application to SARS.
During the RFR process, SARS will review the charges and provide an outcome, either successful or unsuccessful. If the outcome is successful, the penalty may be reduced or waived, depending on the circumstances. If the outcome is unsuccessful, the original penalty will stand.
It’s important to note that the RFR process has strict deadlines that must be adhered to, and failure to meet these deadlines could result in your application being rejected. Additionally, the RFR process is only available for administrative penalties and not for other tax-related matters.
In conclusion, understanding SARS admin penalties is crucial for any South African taxpayer. Failure to comply with tax laws can lead to severe penalties, so it’s essential to stay up-to-date and avoid incurring these penalties. By paying attention to the due dates and understanding the types of penalties charged, you can stay on top of your tax obligations and avoid unnecessary charges.
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