Late submission of return penalty to be imposed where one or more personal income tax returns are outstanding.

In line with the South African Revenue Service’s (“SARS”) strategic objective of making noncompliance hard and costly, it is imperative that SARS enhances its ability to impose administrative penalties in a more responsive manner. With effect from 1 December 2021, SARS has been empowered to levy a late submission of return penalty where one or more personal income tax returns are outstanding. As a transitional measure for the first year, the one tax return or more rule will only apply to the 2021 tax return. Prior to 1 December 2021, SARS could only levy a late submission of return penalty where two or more outstanding tax returns. This older rule will remain in place for one more year for 2020 and earlier returns.

For more information in respect of the above, please refer to Government Notice 1461 in Government Gazette No 45396 dated 29 October 2021, which can be accessed here.

SARS also recently issued an alert stating that a once-off penalty will be imposed for late submission of Personal Income Tax returns where a taxpayer responded to an auto assessment after SARS has issued an original assessment based on an estimate. Additional detail in respect of the latter, as summarised in terms of a previous tax alert, can be accessed here. SARS has issued a stakeholder letter, which can be accessed here, providing detail in respect of the new penalty rule referred to above and addressing the impact thereof on auto-assessments.

The stakeholder letter notes that SARS uses data received from employers and other third-party data providers to issue simulated assessments to a significant number of non-provisional individual taxpayers. As part of the auto-assessment process, SARS requests taxpayers to either accept or edit the simulated assessment via eFiling or the SARS MobiApp, which is then followed by an original assessment issued by SARS. A large number of taxpayers have already either accepted or edited their simulated assessments and received an original assessment from SARS.

The deadline for individual non-provisional taxpayers is 23 November 2021. The stakeholder letter issued by SARS highlights that taxpayers in the auto-assessment population, who neither accepted nor edited and submitted their simulated assessments by this date, will receive an original assessment based on an estimate. This assessment is not subject to objection and appeal. However, a taxpayer who is not in agreement with his or her assessment may file a complete and accurate tax return within 40 business days of the assessment date. The SARS letter states that such a return will be late, which means that normal late submission penalties and interest (where applicable) will apply

Click here to see an example of the reminder SMSs currently being sent by SARS.

12/11/2021