Are you incurring penalties and interest?
Penalties and interest are SARS’ best friends. Specific forms of non-compliance in regard to your taxing affairs may lead to the imposition of penalties and interest by SARS. Irrespective of the mistakes made by the taxpayer, SARS will levy penalties for non-compliance and, where tax is underestimated or when payment is late, SARS will also levy interest until the total underestimated amount is paid in full.
A taxpayer will be levied with a fixed penalty for failure to perform certain acts or to perform the acts as when required in terms of the Income Tax Act.
A taxpayer will be levied with a fixed penalty for failure to perform the following acts or to perform the acts as when required in terms of the Income Tax Act:
- Failure to register as a taxpayer or otherwise register as and when required under the Act;
- Failure to inform the Commissioner of a change of address or other details as and when required under the Act;
- Failure by a company to appoint a Public Officer, appoint a place for service or delivery of notices and documents, keep the office of Public Officer filled, maintain a place for the service or delivery of notices or to notify the Commissioner of any change of Public Officer or of the place for service or delivery of notices as and when required by the Act;
- Failure to submit a return or other related documents or information as and when required under the Act;
- Failure to furnish, produce or make available information, documents or things as and when required under the Act;
- Failure to reply to or answer a question put to a person as and when required under the Act;
Taxpayers can face penalties of up to 200% for non-compliance for their tax affairs. Taxpayers who become aware that they may have made a mistakes must urgently contact a tax professional to investigate whether an application may be made to SARS to rectify the error, correct the tax filing and avoid penalties and/or interest.
This is not an exhaustive list of items and further items are included in this list. Taxpayers can face penalties of up to 200% for non-compliance for their tax affairs. Taxpayers who become aware that they may have made one of the aforementioned mistakes must urgently contact a tax professional to investigate whether an application may be made to SARS to rectify the error, correct the tax filing and avoid penalties and/or interest.
Common mistakes that lead to the imposition of penalties
Provisional taxpayers, especially first time filers, are not aware of the taxing requirements to fully comply with their provisional return status. They typically make mistakes each year which leads to the unnecessary imposition of penalties and interest. Typical mistakes include:
- Not being aware of their provisional tax status;
- Not being aware of their provisional tax filing obligations;
- Underestimating their taxable earnings; and
- Filing of late returns.
Please note that penalties and interest can all be easily avoided if your tax affairs and compliance are all up to date. If you are unsure on whether you are fully compliant, please contact us at tax@theaccountingco.co.za and we will be happy to assist you with a tax diagnostic.
