Category: Tax Administration Act No. 28 of 2011

Section 203 (TAA) – Circumstances where not appropriate to compromise tax debt

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203.    Circumstances where not appropriate to compromise tax debt

 

A senior SARS official may not ‘compromise’ any amount of a tax debt under section 200 if-

 

(a)     the ‘debtor’ was a party to an agreement with SARS to ‘compromise’ an amount of tax debt within the period of three years immediately before the request for the ‘compromise’;

 

(b)     the tax affairs of the ‘debtor’ (other than the outstanding tax debt) are not up to date;

 

(c)     another creditor has communicated its intention to initiate or has initiated liquidation or sequestration proceedings;

 

(d)     the ‘compromise’ will prejudice other creditors (unless the affected creditors consent to the ‘compromise’) or if other creditors will be placed in a position of advantage relative to SARS;

 

(e)     it may adversely affect broader taxpayer compliance; or

 

(f)      the ‘debtor’ is a company or a trust and SARS has not first explored action against or recovery from the personal assets of the persons who may be liable for the debt under Part D of Chapter 11.

Section 210 (TAA) – Non-compliance subject to penalty

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210.    Non-compliance subject to penalty

(1)     If SARS is satisfied that non-compliance by a person referred to in subsection (2) exists, SARS must impose the appropriate ‘penalty’ in accordance with the Table in section 211.

(2)     Non-compliance is failure to comply with an obligation that is imposed by or under a tax Act and is listed in a public notice issued by the Commissioner, other than-

(a)     the failure to pay tax subject to a percentage based penalty under Part C;

(b)     non-compliance in respect of which an understatement penalty under Chapter 16 has been imposed; or

(c)     the failure to disclose information subject to a reportable arrangement or mandatory disclosure penalty under section 212.

[Section 210 substituted by section 70 of Act 21 of 2012. Paragraph (c) substituted by section 40 of Act 33 of 2019]

Section 229 (TAA) – Voluntary disclosure relief

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229.    Voluntary disclosure relief

Despite the provisions of a tax Act, SARS must, pursuant to the making of a valid voluntary disclosure by the applicant and the conclusion of the voluntary disclosure agreement under section 230–

[Words preceding paragraph (a) substituted by section 67 of Act 23 of 2015 effective on 8 January 2016]

(a)     not pursue criminal prosecution for a tax offence arising from the ‘default’;

(b)     grant the relief in respect of any understatement penalty to the extent referred to in column 5 or 6 of the understatement penalty percentage table in section 223; and

(c)     grant 100 per cent relief in respect of an administrative non-compliance penalty that was or may be imposed under Chapter 15 or a penalty imposed under a tax Act, excluding a penalty imposed under that Chapter or in terms of a tax Act for the late submission of a return.

[Paragraph (c) substituted by section 67 of Act 23 of 2015 effective on 8 January 2016]

Section 204 (TAA) – Procedure for compromise of tax debt

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204.    Procedure for compromise of tax debt

 

(1)     To ‘compromise’ a tax debt, a senior SARS official and the ‘debtor’ must sign an agreement setting out-

 

(a)     the amount payable by the ‘debtor’ in full satisfaction of the debt;

 

(b)     the undertaking by SARS not to pursue recovery of the balance of the tax debt; and

 

(c)     the conditions subject to which the tax debt is ‘compromised’ by SARS.

 

(2)     The conditions referred to in subsection (1)(c) may include a requirement that the ‘debtor’ must-

 

(a)     comply with subsequent obligations imposed in terms of a tax Act;

 

(b)     pay the tax debt in the manner prescribed by SARS; or

 

(c)     give up specified existing or future tax benefits, such as carryovers of losses, deductions, credits and rebates.

Section 211 (TAA) – Fixed amount penalty table

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211.    Fixed amount penalty table

 

(1)     For the non-compliance referred to in section 210, SARS must impose a ‘penalty’ in accordance with the following Table:

 

Table: Amount of Administrative Non-Compliance Penalty

 

1

 

Item

 2

 

Assessed loss or taxable income for ‘preceding year’

 3

 

‘Penalty’
(i) Assessed loss R250
(ii) R0-R250 000 R250
(iii) R250 001-R500 000 R500
(iv) R500 001-R1 000 000 R1 000
(v) R1 000 001-R5 000 000 R2 000
(vi) R5 000 001-R10 000 000 R4 000
(vii) R10 000 001-R50 000 000 R8 000
(viii) Above R50 000 000 R16 000


(2)     The amount of the ‘penalty’ in column 3 will increase automatically by the same amount for each month, or part thereof, that the person fails to remedy the non-compliance within one month after-

 

(a)     the date of assessment of the penalty, if SARS is in possession of the current address of the person and is able to deliver the assessment, but limited to 35 months after the date of assessmeny; or

 

(b)     the date of the non-compliance if SARS is not in possession of the current address of the person and is unable to deliver the ‘penalty assessment’, but limited to 47 months after the date of non-compliance.

 

(3)     The following persons, except those falling under item (viii) of the Table or those that did not trade during the year of assessment, are treated as falling under item (vii) of the Table:

 

(a)     a company listed on a recognised stock exchange as referred to in paragraph 1 of the Eighth Schedule to the Income Tax Act;

 

(b)     a company whose gross receipts or accruals for the ‘preceding year’ exceed R500 million;

 

(c)     a company that forms part of a “group of companies” as defined in section 1 of the Income Tax Act, which group includes a company described in item (a) or (b);or

 

(d)     a person or entity, exempt from income tax under the Income Tax Act but liable to tax under another tax Act, whose gross receipts or accruals exceed R30 million.

 

(4)     SARS may, except in the case of persons referred to in subsection (3)(a) to (c),if the taxable income of the relevant person for the ‘preceding year’ is unknown or that person was not a taxpayer in that year-

 

(a)     impose a ‘penalty’ in accordance with item (ii) of column 1 of the Table; or

 

(b)     estimate the amount of taxable income of the relevant person for the ‘preceding year’ based on available relevant material and impose a ‘penalty’ in accordance with the applicable item in column 1 of the Table.

 

(5)     Where, upon determining the actual taxable income or assessed loss of the person in respect of whom a ‘penalty’ was imposed under subsection (4), it appears that the person falls within another item in column 1 of the Table, the ‘penalty’ must be adjusted in accordance with the applicable item in that column with effect from the date of the imposition of the ‘penalty’ issued under subsection (4).

Section 230 (TAA) – Voluntary disclosure agreement

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230.    Voluntary disclosure agreement

 

The approval by a senior SARS official of a voluntary disclosure application and relief granted under section 229, must be evidenced by a written agreement between SARS and the qualifying person who is liable for the outstanding tax debt in the prescribed format and must include details on-

 

(a)     the material facts of the ‘default’ on which the voluntary disclosure relief is based;

 

(b)     the amount payable by the person, which amount must separately reflect the understatement penalty payable;

 

(c)     the arrangements and dates for payment; and

 

(d)     relevant undertakings by the parties.