What It Means When Companies Receive Admin Penalties From SARS
In South Africa, businesses are required to comply with a range of tax regulations, including
filing returns and paying taxes on time. However, failure to meet these obligations can result in
administrative penalties imposed by the South African Revenue Service (SARS). Here is a
detailed description of how and why these penalties are issues, and what businesses need to
know about avoiding or handling them.
What Are Admin Penalties?
Admin penalties are financial fines imposed by SARS on companies for non-compliance with
specific tax obligations, namely the late submissions of returns. These penalties are not
criminal charges but rather administrative charges for failing to meet the requirements set out
by tax laws.
Admin penalties are calculated based on the time lapsed before submitting returns, and it is
designed to encourage compliance with tax regulations. While the amount of the penalty can
vary, it can accumulate over time if the business continues to neglect its obligations and miss
deadlines. These admin penalties can vary between R250 to R16 000 per month. The admin
penalties on an outstanding return recur every month, up to a maximum of 36 months.
Common Reasons for Admin Penalties
Businesses and individuals incur admin penalties for failing to submit tax returns on time.
Whether it’s VAT returns, income tax returns, or employee tax (PAYE) submissions, the late
filing of these returns can result in penalties. SARS offers businesses a fixed deadline for each
type of return, and missing these deadlines without valid reason can trigger penalties.
Calculations of Admin Penalties
Admin penalties are calculated based on the taxable income/loss of the preceding year, based
on the penalty table in Section 211(1) of the TAA. These penalties start at R250 per month,
based on a taxable loss to a taxable income of R250 000 in the preceding year, and the
maximum penalty is R16 000 per month based on a taxable income above R50 million in the
preceding year.
How to Avoid Admin Penalties
Businesses can take proactive steps to avoid administrative penalties from SARS by honouring
the deadlines of submissions and submit returns on time.
Should you need assistance, you can engage with a qualified tax professional that can provide
valuable guidance in navigating the complex landscape of South African tax laws. Professionals
can help ensure compliance and avoid costly mistakes.
Business Services can assist with the above-mentioned steps to avoid admin penalties.
Business Services provides their clients with accurate financial records in a timely manner,
which ensures the compliance of their clients.