SARS admin penalties can be a significant financial burden for taxpayers, including non-profit companies. These penalties are imposed for various reasons, such as the failure to submit or late submission of tax returns. Understanding how to deal with these penalties effectively is crucial to minimising their impact.
SARS administrative (admin) penalties are fines levied on taxpayers who fail to submit their tax returns on time. These penalties can be substantial, accumulating up to R16,000 per month. Even non-profit companies are not exempt from these penalties, emphasising the importance of timely tax return submissions. The financial impact of these penalties can escalate quickly, making it essential to address them promptly.
Facing a SARS Admin Penalty? Here’s What To Do
Stop the Bleeding
The first and most critical step when facing a SARS admin penalty is to submit any outstanding tax returns immediately. This action halts the further accrual of penalties, preventing the situation from worsening.
Pay or Object? Understanding Your Options
Once you’ve submitted your outstanding returns, you have two primary options: pay the penalty or object to it.
Paying the Penalty
If you acknowledge the penalty is justified, paying it as soon as possible will stop additional interest and potential further penalties from accruing.
Objecting to the Penalty
If you believe the penalty is unwarranted, you can object to it. The success of your objection hinges on presenting valid “grounds for objection.” Acceptable reasons for objection include:
SARS error
Serious illness
Death of a taxpayer or immediate family member
Liquidation or sequestration
Not required to file a return
Other/mitigation factors: Providing a detailed explanation of why the return was late and the steps taken to ensure timely filing in the future.
Navigating the SARS Objection Process
The SARS objection process involves three main steps:
Step 1: Request for Remission (RFR)
A Request for Remission (RFR) is your initial step in the objection process. In this step, you request SARS to waive the penalty. Possible outcomes of an RFR include:
Fully Allow: The penalty is waived entirely.
Disallow: The penalty remains unchanged.
Partially Allow: Part of the penalty is waived.
Step 2: Notice of Objection (NOO)
If your RFR is disallowed or partially allowed, you can file a Notice of Objection (NOO). This formal objection must be filed within 30 business days of the RFR decision. It’s essential to present all relevant information and evidence to support your case.
Step 3: Notice of Appeal (NOA)
The final step, if your NOO is unsuccessful, is to file a Notice of Appeal (NOA). This step involves appealing to the tax court for a review of the decision. It is the last resort and requires thorough preparation and documentation.
Emphasise Detailed Information in RFR
It is crucial to include all relevant information in your RFR, as additional submissions are generally not allowed in later stages. Detailed explanations and supporting evidence increase the chances of a successful outcome.
Prevention is Key: Avoiding SARS Admin Penalties Altogether
Avoiding SARS admin penalties is always preferable to dealing with them. Here are some tips to maintain tax compliance:
Ensure timely filing of all tax returns.
Use available resources, such as SARS online services and professional tax advisors, to assist with company tax return filing.
Keep accurate and up-to-date records of all financial transactions.
Conclusion
Dealing with SARS admin penalties involves acting quickly, understanding your options for objection, and prioritising tax compliance to prevent future penalties. By following these steps, you can mitigate the financial impact and avoid unnecessary stress.
Bonus Tip
Checklist for Facing a SARS Admin Penalty:
Submit any outstanding tax returns immediately.
Decide whether to pay the penalty or object to it.
If objecting, determine valid grounds for objection (SARS error, serious illness, etc.).
File a Request for Remission (RFR) with detailed explanations and supporting evidence.
If necessary, file a Notice of Objection (NOO) within 30 business days of the RFR decision.
As a last resort, file a Notice of Appeal (NOA) with comprehensive documentation.
Prioritise tax compliance to avoid future penalties.
By adhering to these steps and maintaining diligent tax practices, you can effectively manage and prevent SARS admin penalties. Need assistance with your company tax returns? Get Thrive’s expert help today.