Q: The annual contribution limit for tax-free investments is R30 000. A 40 per cent
penalty is levied by SARS on the excess above the annual limit. Who must
withhold or deduct this penalty? What if the individual invested in different
companies? Or will the penalty be payable on assessment? What if the taxpayer
is below the tax threshold?
newly introduced section 12T(7) Income Tax Act provides that 40% of the amount
contributed in excess of either the R30 000 annual threshold or the R500 000
life time threshold will be deemed to be an amount of normal tax payable by
that person in respect of that year of assessment. In our view the
non-compliance would be determined on assessment and would then be added as
normal tax payable in the assessment, therefore no withholding of the deemed
normal tax amount would apply.
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 decision.
Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.