14 October 2009
The South African Revenue Service (Sars) has unveiled a string of new penalties as it moves to crack down on non-compliant taxpayers. The penalties come into effect on 23 November 2009.
In effect, taxpayers have until 20 November – the final deadline for the 2009 tax season – to submit any outstanding returns in order to avoid being penalised under the new regime.
The penalties cover a range of non-compliance, including failure to register as a taxpayer, failure to inform Sars of a change of address and other personal particulars, and failure to submit tax returns and other documents to Sars.
Sars delayed implementing the new penalties to give taxpayers time to rectify their affairs and to enable Sars to develop its own systems to automatically issue penalties.
The implementation will be phased in over a period, beginning on 23 November for taxpayers with outstanding income tax returns.
In the interest of fairness, Sars will first impose the new penalties against repeat offenders – taxpayers who have failed to submit returns for multiple years.
The new regulations will see taxpayers who fail to submit their tax returns receive penalties ranging from R250 to R16 000 a month, depending on the individual’s salary.
The penalties will recur each month for as long as the income tax return remains outstanding. The regulation allows for penalties to be applied for up to 35 months, and for penalties to be doubled monthly.
This means a person earning about R300 000 a year who fails to submit a tax return for 35 months could end up paying a penalty of close to R500 000.
According to Sars’ head of legal and policy affairs, Kosie Louw, Sars could appoint an agency to collect the money during that 35-month period. In extreme cases, a repeat offender could even be criminally charged.
As part of the collection process, Sars will approach employers to act as agents in terms of the relevant tax legislation.
Sars commissioner Oupa Magashula said the new penalty regulations had been communicated and explained to all the relevant stakeholders, including professional bodies representing tax practitioners.
Magashula described the current penalty regime as “ineffective”, saying Sars would not be tolerant of tax offenders under the new regime.
A Sars report reveals that a staggering 5.3-million returns due to the institution were outstanding in the financial year 2007/08, and that legal action had to be taken against 81 000 taxpayers.
According to Magashula, the number currently stands at just over 3-million. “If we continue to tolerate this non-compliance, that is when we will see our tax system falling flat and the legitimacy of the state undermined,” he said.
“We are very serious about making sure that we improve the level of compliance in our country. We want people to understand the implications of not filing on time and failure to meet their obligations.”