Category: Tax Administration Act No. 28 of 2011

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.

Section 205 (TAA) – SARS not bound by compromise of tax debt

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205.    SARS not bound by compromise of tax debt

 

SARS is not bound by a ‘compromise’ if-

 

(a)     the ‘debtor’ fails to disclose a material fact to which the ‘compromise’ relates;

 

(b)     the ‘debtor’ supplies materially incorrect information to which the ‘compromise’ relates;

 

(c)     the ‘debtor’ fails to comply with a provision or condition contained in the agreement referred to in section 204; or

 

(d)     the ‘debtor’ is liquidated or the ‘debtor’s’ estate is sequestrated before the ‘debtor’ has fully complied with the conditions contained in the agreement referred to in section 204.

Section 212 (TAA) – Reportable arrangement penalty

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212. Reportable arrangement and mandatory disclosure penalty

(1)     A person referred to in-

(a)     paragraph (a) or (b) of the definition of ‘participant’ in section 34, who fails to disclose the information in respect of a ‘reportable arrangement’, as required by section 37; or

(b)     the definition of intermediary in the regulations, issued in respect of paragraph (a) of the definition of ‘international tax standard’, who fails to disclose the information required to be disclosed under the regulations,

is liable to a ‘penalty’, for each month that the failure continues (up to 12 months), in the amount of-

(i)      R50 000, in the case of a ‘participant’ or intermediary, as the case may be, other than the ‘promoter’; or

(ii)      R100 000, in the case of the ‘promoter’.

(2)     The amount of ‘penalty’ determined under subsection (1) is doubled if the amount of anticipated ‘tax benefit’, as defined in section 34, for the ‘participant’ by reason of the arrangement (within the meaning of section 35) exceeds R5 000 000, and is tripled if the benefit exceeds R10 000 000.

(3)     A person referred to in paragraph (c) of the definition of ‘participant’ in section 34, who fails to disclose the information in respect of a ‘reportable arrangement’ as required by section 37 is liable to a ‘penalty’ in the amount of R50 000.

[Section 212 amended by section 62(a) and (b) of Act 23 of 2015 and substituted by section 41 of Act 33 of 2019]

Section 231 (TAA) – Withdrawal of voluntary disclosure relief

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231.    Withdrawal of voluntary disclosure relief

 

(1)     In the event that, subsequent to the conclusion of a voluntary disclosure agreement under section 230, it is established that the applicant failed to disclose a matter that was material for purposes of making a valid voluntary disclosure under section 227, a senior SARS official may-

 

(a)     withdraw any relief granted under section 229;

 

(b)     regard an amount paid in terms of the voluntary disclosure agreement to constitute part payment of any further outstanding tax debt in respect of the relevant ‘default’; and

 

(c)     pursue criminal prosecution for a tax offence.

 

(2)     Any decision by the senior SARS official under subsection (1) is subject to objection and appeal.