Remission of fixed amount penalty for the non-submission of a return
25 November 2014
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: An employee of
a client of mine is in trouble with SARS. He has a whole load of penalties for
non-submission of income tax returns.
When I submitted the returns he was actually assessed with a
refund, however because of the outstanding admin penalties it was not refunded.
I requested remittance of penalties in light of the outstanding IT Returns
having been submitted but this was rejected – no reason given. I appealed, also
rejected – no reason given.
Can anyone help?
A: These seem to
be the fixed amount administrative non-compliance penalties addressed in
Chapter 15 of the Tax Administration Act (the TAA); specifically sections 210
and 211. My statement is based on the fact that you submitted that the
penalties are for the non-submission of a return.
Sections 217 and 218 deal with the remittance of penalties
imposed in terms of chapter 15 of the TAA.
You stated "I requested remittance of penalties in light of
the outstanding IT Returns having been submitted but this was rejected – no
The fixed amount non-compliance penalties are not remitted
just because you fixed the non-compliance (i.e. submitted the outstanding
returns). They are imposed for each month that the non-compliance continues.
When you ultimately fix the non-compliance, that doesn’t change the fact that
you were non-compliant for all those previous months. This is why SARS rejected
your remittance request.
Furthermore, section 217(1) sets out when the fixed amount
penalty can be remitted:
(1) If a ‘penalty’
has been imposed in respect of—
(b) an incidence of non-compliance described in section 210
if the duration of the non-compliance is less than five business days,
SARS may, in respect of a ‘penalty’ imposed under section
210 or 212, remit the ‘penalty’, or a portion thereof if appropriate, up to an
amount of R2 000 if SARS is satisfied that—
reasonable grounds for the non-compliance exist; and
the non-compliance in issue has been remedied.
From the information you’ve provided, it does not seem your
client will qualify for remittance under this provision.
Your other option could be section 218, which provides for
the remittance of penalty in exceptional circumstances. Section 218(1) states:
SARS must, upon receipt of a ‘remittance request’, remit the
‘penalty’ or if applicable a portion thereof, if SARS is satisfied that one or
more of the circumstances referred to in subsection (2) rendered the person on
whom the ‘penalty’ was imposed incapable of complying with the relevant
obligation under the relevant tax Act.
(2) The circumstances referred to in subsection
(1) are limited to—
(a) a natural or human-made disaster;
(b) a civil disturbance or disruption in services;
(c) a serious illness or accident;
(d) serious emotional or mental distress;
(e) any of the following acts by SARS—
i. a capturing error;
ii. a processing delay;
iii. provision of incorrect information in an
official publication or media release issued
by the Commissioner;
iv. delay in providing information to any person; or
v. failure by SARS to provide sufficient time for
an adequate response to a request
for information by SARS;
(f) serious financial hardship, such as—
in the case of an individual, lack of basic
living requirements; or
in the case of a business, an immediate danger
that the continuity of business
operations and the continued employment of its
employees are jeopardised; or
(g) any other
circumstance of analogous seriousness.
If any of the above are applicable to your client, you can
request for the penalties to be remitted based on section 218.
Disclaimer: Nothing in
this query and answer should be construed as constituting tax advice or a tax
opinion. An expert should be consulted for advice based on the facts and
circumstances of each transaction/case. Even though great care has been taken
to ensure the accuracy of the answer, SAIT do not accept any responsibility for
consequences of decisions taken based on this query and answer. It remains your
own responsibility to consult the relevant primary resources when taking a