Category: Tax Administration Act No. 28 of 2011

Section 223 (TAA) – Understatement penalty percentage table

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223.    Understatement penalty percentage table

(1)     The understatement penalty percentage table is as follows:

1

Item

2

Behaviour

3

Standard Case

4

If obstructive, or if it is a ‘repeat case’

5

Voluntary disclosure after notification of audit or criminal investigation

6

Voluntary disclosure before notification of audit or criminal investigation

(i)

‘Substantial under-statement’

10%

20%

5%

0%

(ii)

Reasonable care not taken in completing return

25%

50%

15%

0%

(iii)

No reasonable grounds for ‘tax position’ taken

50%

75%

25%

0%

(iv)

“Impermissible avoidance arrangement”

75%

100%

35%

0%

(v)

Gross negligence

100%

125%

50%

5%

(vi)

Intentional tax evasion

150%

200%

75%

10%

[Subsection (1) substituted by section 76 of Act 39 of 2013 and section 62 of Act 16 of 2016 effective on 19 January 2017]

(2)     An understatement penalty for which provision is made under this Chapter is also chargeable in cases where-

(a)     an assessment based on an estimation under section 95 is made; or

(b)     an assessment agreed upon with the taxpayer under section 95(3) is issued.

(3)     SARS must remit a ‘penalty’ imposed for a ‘substantial understatement’ if SARS is satisfied that the taxpayer-

(a)     made full disclosure to SARS of the arrangement, as defined in section 34, that gave rise to the prejudice to SARS or the fiscus by no later than the date that the relevant return was due; and

[Paragraph (a) substituted by section 42 of Act 33 of 2019]

(b)     was in possession of an opinion by an independent registered tax practitioner that-

(i)      was issued by no later than the date that the relevant return was due;

(ii)     was based upon full disclosure of the specific facts and circumstances of the arrangement and, in the case of any opinion regarding the applicability of the substance over form doctrine or the anti-avoidance provisions of a tax Act, this requirement cannot be met unless the taxpayer is able to demonstrate that all of the steps in or parts of the arrangement were fully disclosed to the tax practitioner, whether or not the taxpayer was a direct party to the steps or parts in question; and

(iii)    confirmed that the taxpayer’s position is more likely than not to be upheld if the matter proceeds to court.

Section 216 (TAA) – Remittance of penalty for failure to register

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216.    Remittance of penalty for failure to register

 

If a ‘penalty’ is imposed on a person for a failure to register as and when required under this Act, SARS may remit the ‘penalty’ in whole or in part if-

 

(a)     the failure to register was discovered because the person approached SARS voluntarily; and

 

(b)     the person has filed all returns required under a tax Act.

Section 224 (TAA) – Objection and appeal against imposition of understatement penalty

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224.    Objection and appeal against imposition of understatement penalty

 

The imposition of an understatement penalty under section 222 or a decision by SARS not to remit an understatement penalty under section 223(3), is subject to objection and appeal under Chapter 9.

“First incidence” definition of section 208 of TAA

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‘first incidence’ means an incidence of non-compliance by a person if no ‘penalty assessment’ under this Chapter was issued during the preceding 36 months, whether involving an incidence of non-compliance of the same or a different kind, and for purposes of this definition a ‘penalty assessment’ that was fully remitted under section 218 must be disregarded;

Section 217 (TAA) – Remittance of penalty for nominal or first incidence of non-compliance

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217.    Remittance of penalty for nominal or first incidence of non-compliance

 

(1)     If a ‘penalty’ has been imposed in respect of-

 

(a)     a ‘first incidence’ of  non-compliance; or

 

(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.

 

(2)     In the case of a ‘penalty’ imposed under section 212, the R2 000 limit referred to in subsection (1) is changed to R100 000.

 

(3)     If a ‘penalty’ has been imposed under section 213, SARS may remit the ‘penalty’, or a portion thereof, if SARS is satisfied that-

 

(a)     the ‘penalty’ has been imposed in respect of a ‘first incidence’ of non-compliance, or involved an amount of less than R2000;

 

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

 

(c)     the non-compliance in issue has been remedied.

Section 250 (TAA) – Authentication of documents

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250.    Authentication of documents

 

(1)     A form, notice, demand or other document issued or given by or on behalf of SARS or a SARS official under a tax Act is sufficiently authenticated if the name of SARS or the name or official designation of the SARS official is stamped or printed on it.

 

(2)     A return made or purporting to be made or signed by or on behalf of a person is regarded as duly made and signed by the person affected unless the person proves that the return was not made or signed by the person or on the person’s behalf.

 

(3)     Subsection (2) applies to other documents submitted to SARS by or on behalf of a person.

Section 265 (TAA) – Continuation of appointment to a post or office or delegation by Commissioner

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265.    Continuation of appointment to a post or office or delegation by Commissioner

 

(1)     A person appointed to a post or office or delegated by the Commissioner under the SARS Act or a tax Act, which appointment or delegation is in force immediately before the commencement date of this Act, is regarded as appointed or delegated under this Act.

 

(2)     Subsection (1) applies until the person is so appointed or delegated under this Act or the appointment or delegation is withdrawn.