Filing your tax return every year is like a visit to the dentist – the longer you put it off, the more it’s going to hurt. If you submit your personal or company tax returns late, the South African Revenue Service (SARS) may levy an administrative penalty under section 210 of the Tax Administration Act. The Act defines various types of non-compliance and prescribes fixed-amount penalties for each type.

Previously, you were liable for administrative penalties for late submission only if you had 2 or more tax returns outstanding for the tax years 2007 to 2020. Since a change in legislation on 1 December 2022, however, SARS will charge penalties if you have even a single tax return outstanding from tax years 2007 onwards.

Common causes of tax penalties
 

Personal income tax

Non-compliance includes any outstanding returns or the failure to disclose information in the returns you submit. SARS could charge you a penalty if you failed to submit an income tax return for any years of assessment from 2007 onwards. But it’s still in your best interest to submit outstanding returns even if they’re late, because SARS will levy a monthly recurring penalty until you are compliant.

If you were auto-assessed and you disagree with the assessment received, you must submit a full tax return within 40 days of receiving your assessment. This return will be late and therefore subject to penalties.

Corporate income tax

If your business has not submitted an income tax return, or you submitted any corporate tax returns late, SARS could levy penalties just as they do for personal tax returns. However, SARS still issues final demands for corporate income tax returns, and your business will have 21 business days after the final demand to submit.
 

What penalties could end up costing

SARS levies various fixed-amount penalties, calculated on a sliding scale based on your taxable income, for different non-compliance issues, including late or missing returns. These can range from R250 to R16,000 a month. Penalties on an outstanding return recur every month, up to a maximum of 35 months.

I received a SARS penalty – what are my options?

If your penalty is correct and you do have an unsubmitted tax return, the simplest approach is to pay the penalty and submit your return. You can pay the penalty through the available SARS payment channels or make a payment arrangement if you cannot afford the once-off payment. If you don’t pay the penalty, SARS may employ an agent, typically your employer, to collect the money on their behalf – in other words, to garnish your salary or wages.
 

If you disagree with the penalty, however, you have some options – although you should consult a tax adviser to help you. You can submit an official request for remission (RFR) to SARS, which includes good reasons why you shouldn’t pay the penalty.

The RFR, objection and appeal process

SARS no longer issues statements of account (SOA) for penalties, but these are necessary if you want to lodge an RFR, an objection or an appeal. You can download and view an SOA on your SARS eFiling profile by searching on SARS Correspondence > Request Admin Penalty SOA. The SOA also contains payment details if all these avenues eventually find that the penalty is correct, and you must pay it.

You must have valid reasons to launch a dispute process with SARS. Reasons to include in your RFR that will be considered include:

• You have experienced serious illness, sequestration, liquidation or you are acting for a deceased taxpayer.
  
  
• You are not liable to file a tax return, for example, because you earn less than the tax threshold (R95,750 in the 2024 tax year). We recommend that you submit your tax return even if your taxable income is less than the threshold.
  
  
• There has been a SARS system or other error that has prevented you from submitting your return on time.

You will need to be compliant to register objections or request a remission. The SARS efiling system will then lead you through the necessary steps. You will need to wait for SARS to rule on your RFR and confirm their decision on efiling – if it is denied, you may then submit the forms lodging an objection to that decision. If your objection is rejected, you have the option to submit an appeal.

Whether you’re a private or business taxpayer, registering for eFiling and viewing your profile is the easiest way to check on any aspect of your tax return submissions, history and reasons for penalties. You can also call the SARS Contact Centre, or make an appointment to go to a SARS branch.

If you’re still unsure of any steps you need to take to settle penalties and avoid any in future, consult a Nedbank financial adviser for sound advice on your tax affairs.