Late Tax Filing Penalty in South Africa: What You Need to Know

Updated on January 20, 2024

Introduction: Late filing of taxes can result in penalties imposed by the South African Revenue Service (SARS). This article provides an overview of the SARS late taxpayers penalty and offers guidance on what to do next. It also explains the process for disputing the penalty if you disagree with it.Understanding the SARS Late Taxpayers Penalty: SARS has the authority to levy administrative fines on taxpayers who fail to file their tax returns on time. These penalties can be severe and are imposed for each month that the returns are not filed, whether partially or not at all. However, it’s important to note that only personal income tax (ITR12) and corporate income tax (ITR14) returns are subject to fixed penalties. If your annual income before taxes is less than R500,000, you are not obligated to file tax returns.How Much is the Late Tax Filing Penalty in South Africa?

The minimum penalty for an individual is currently set at R250 per return per month. For instance, if you have four unpaid tax returns, you may face a minimum penalty of R1,000 per month. The penalty amount varies based on the taxable income or assessed loss, and the scale is as follows:– R0-R250,000: R250 penalty – R250,000-R500,000: R500 penalty – R500,001-R1,000,000: R1,000 penalty – R1,000,001-R5,000,000: R2,000 penalty – R5,000,001-R10,000,000: R4,000 penalty – R10,000,001-R50,000,000: R8,000 penalty – More than R50,000,000: R16,000 penaltyIt’s important to note that the penalty amount can change based on the assessed loss or taxable income for the specific tax year being assessed. To be eligible for the highest penalty of R16,000 per month, your taxable income must exceed R50 million for a particular tax year.What to Do Next: If you have a valid reason for not filing your tax returns on time, you can contest the penalty and request it to be waived. To do so, submit your returns as soon as possible, and through eFiling, ask for the penalty to be waived. You can also request a pardon for your late submission. However, it’s crucial to file the returns promptly, even if you don’t have a valid excuse, to avoid further penalties and correct any non-compliance. Seek assistance from your accountant to locate any missing paperwork and make the penalty payment to resolve the pending returns.What if I Disagree with the SARS Late Taxpayers Penalty? If you disagree with the penalty imposed by SARS, you can submit a Request for Remission (RFR) to have the fines waived. It’s important to provide an explanation for the non-compliance. However, it’s worth mentioning that the RFR may still be rejected if the taxpayer chooses to proceed with the objection and appeals procedures. In some cases, SARS may reach a partial payment settlement. However, the objection procedures cannot be initiated before the RFR is filed and considered. RFR forms can be found online or obtained from any SARS branch.Conclusion: Late filing of tax returns can result in penalties imposed by SARS. It’s important to adhere to the deadlines and guidelines set by SARS to avoid penalties. In case of late filing, taxpayers may face administrative fines that can be severe, depending on the duration of non-compliance and the taxpayer’s taxable income or assessed loss. It’s advised to consult with an accountant to ensure prompt filing, make penalty payments if necessary, and consider disputing the penalty through the Request for Remission process.