Category: Tax Administration Act No. 28 of 2011

Section 207 (TAA) – Reporting by Commissioner of tax debts written off or compromised

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207.    Reporting by Commissioner of tax debts written off or compromised

 

(1)     The amount of tax debts ‘written off’ or ‘compromised’ during a financial year must be disclosed in the annual financial statements of SARS relating to administered revenue for that year.

 

(2)     The Commissioner must on an annual basis provide to the Auditor-General and to the Minister a summary of the tax debts which were ‘written off’ or ‘compromised’ in whole or in part during the period covered by the summary, which must-

 

(a)     be in a format which, subject to section 70(5), does not disclose the identity of the ‘debtor’ concerned;

 

(b)     be submitted within 60 business days following the end of the fiscal year; and

 

(c)     contain details of the number of tax debts “written off” or “compromised” and the amount of revenue forgone, which must be reflected in respect of main classes of taxpayers or sections of the public.

“Understatement” definition of section 221 of TAA

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“understatement” means any prejudice to SARS or the fiscus as a result of-

(a)     failure to submit a return required under a tax Act or by the Commissioner;

[Paragraph (a) substituted by section 22 of Act 22 of 2018]


(b)     an omission from a return;

(c)     an incorrect statement in a return;

(d)     if no return is required, the failure to pay the correct amount of “tax”; or

(e)     an “impermissible avoidance arrangement.

[Definition of “understatement” amended by section 74 of Act 39 of 2013 and substituted by section 61 of Act 16 of 2016 effective on 19 January 2017]

Section 214 (TAA) – Procedures for imposing penalty

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214.    Procedures for imposing penalty

 

(1)     A ‘penalty’ imposed under Part B or C is imposed by way of a ‘penalty assessment’, and if a ‘penalty assessment’ is made, SARS must give notice of the assessment in the format as SARS may decide to the person, including the following:

 

(a)     the non-compliance in respect of which the ‘penalty’ is assessed and its duration;

 

(b)     the amount of the ‘penalty’ imposed;

 

(c)     the date for paying the ‘penalty’;

 

(d)     the automatic increase of the ‘penalty’; and

 

(e)     a summary of procedures for requesting remittance of the ‘penalty’.

 

(2)     A ‘penalty’ is due upon assessment and must be paid-

 

(a)     on or before the date for payment stated in the notice of the ‘penalty assessment’; or

 

(b)     where the ‘penalty assessment’ is made together with an assessment of tax, on or before the deadline for payment stated in the notice of the assessment for tax.

 

(3)     SARS must give the taxpayer notice of an adjustment to the ‘penalty’ in accordance with section 211(2) or 213(2).

Section 215 (TAA) – Procedure to request remittance of penalty

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215.    Procedure to request remittance of penalty

 

(1)     A person who is aggrieved by a ‘penalty assessment’ notice may, on or before the date for payment in the ‘penalty assessment’, in the prescribed form and manner, request SARS to remit the ‘penalty’ in accordance with Part E.

 

(2)     The ‘remittance request’ must include-

 

(a)     a description of the circumstances which prevented the person from complying with the relevant obligation under a tax Act in respect of which the ‘penalty’ has been imposed; and

 

(b)     the supporting documents and information as may be required by SARS in the prescribed form.

 

(3)     During the period commencing on the day that SARS receives the ‘remittance request’, and ending 21 business days after notice has been given of SARS’ decision, no collection steps relating to the ‘penalty’ amount may be taken unless SARS has a reasonable belief that there is-

 

(a)     a risk of dissipation of assets by the person concerned; or

 

(b)     fraud involved in the origin of the non-compliance or the grounds for remittance.

 

(4)     SARS may extend the period referred to in subsection (1) if SARS is satisfied that-

 

(a)     the non-compliance in issue is an incidence of non-compliance referred to in section 216 or 217, and that reasonable grounds exist for the late receipt of the ‘remittance request’; or

 

(b)     a circumstance referred to in section 218(2) rendered the person incapable of submitting a timely request.

 

(5)     If a tax Act other than this Act provides for remittance grounds for a “penalty”, SARS may despite the provisions of section 216, 217 or 218 remit the “penalty” or a portion thereof under such grounds.

Section 222 (TAA) – Understatement penalty

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222.    Understatement penalty

(1)     In the event of an “understatement” by a taxpayer, the taxpayer must pay, in addition to the “tax” payable for the relevant tax period, the understatement penalty determined under subsection (2) unless the ‘understatement’ results from a bona fide inadvertent error.

(2)   The understatement penalty is the amount resulting from applying the highest applicable understatement penalty percentage in accordance with the table in section 223 to each shortfall determined under subsections (3) and (4) in relation to each ‘understatement’.

[Subsection (2) substituted by section 75(a) of Act 39 of 2013 and by section 23(a) of Act 22 of 2018.]

(3)     The shortfall is the sum of-

(a)     the difference between the amount of ‘tax’ properly chargeable for the tax period and the amount of ‘tax’ that would have been chargeable for the tax period if the ‘understatement’ were accepted;

(b)     the difference between the amount properly refundable for the tax period and the amount that would have been refundable if the ‘understatement’ were accepted; and

(c)     the difference between the amount of an assessed loss or any other benefit to the taxpayer properly carried forward from the tax period to a succeeding tax period and the amount that would have been carried forward if the ‘understatement’ were accepted, multiplied by the tax rate determined under subsection (5).

(4)  

(a)   If there is a difference under both paragraphs (a) and (b) of subsection (3), the shortfall must be reduced by the amount of any duplication between the paragraphs.

(b)   Where the ‘understatement’ is the failure to submit a return, the ‘tax’ that resulted from the ‘understatement’, had the ‘understatement’ been accepted, for purposes of subsection (3), must be regarded as nil.

[Subsection (4) substituted by section 75(c) of Act 39 of 2013 and by section 23(b) of Act 22 of 2018.]

(5)     The tax rate applicable to the shortfall determined under subsections (3) and (4) is the maximum tax rate applicable to the taxpayer, ignoring an assessed loss or any other benefit brought forward from a preceding tax period to the tax period.

(6)     Any penalty imposed under subsection (2) must be reduced by any penalty imposed under section 4(2) of the Employment Tax Incentive Act, 2013, in respect of the same employment tax incentive amount.

[Subsection (6) added section 27(1) by of Act 16 of 2022 deemed effective on 1 September 2022, and applicable to any return, for purposes of paragraph 14(2) of the Fourth Schedule to the Income Tax Act, submitted or after that date]