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Remission of fixed amount penalty for the non-submission of a return

Tuesday, 25 November 2014   (0 Comments)
Posted by: Author: SAIT Technical
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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 reason given.”

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—

(i)                  reasonable grounds for the non-compliance exist; and

(ii)                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—

i.            in the case of an individual, lack of basic living requirements; or

ii.            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 decision.



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