The Tax Administration Act : what every corporate tax administrator should know (part 2)

• Jurisdiction: South Africa
• Author: Des Kruger
• DOI: 10.10520/EJC174112
• Published date: 01 September 2013
• Date: 01 September 2013
• Pages: 9-23
• Published By: Siber Ink

9

© SIBER INK

The Tax Administration Act:

WHAT EVERY CORPORATE TAX

ADMINISTRATOR SHOULD KNOW (PART 2)

DES KRUGER1

Abstract

The previous article in this series2 dealt mostly with the more administrative

aspects of the Tax Administration Act 28 of 2011 (‘the TAA’). This article deals

with the penalty provisions of the Act. In essence, the TAA provides for two

penalty regimes, namely an administrative non-compliance penalty and an

understatement penalty. While purportedly merely being a replication of the

penalty provisions of the various tax Acts, there are some subtle differences

and nuances that are important to identify and understand.

The administrative non-compliance penalty regime comprises a fixed-

amount penalty and a percentage-based penalty. A fixed-amount penalty

is imposed for failing to comply with an obligation imposed by or under

any tax act, and which is listed in a public notice issued by SARS. To date,

the only public notice that has been issued lists as a non-compliance issue

a failure to timeously render a personal income tax return — although a

number of future non-compliance incidences are identified by SARS in

its Short Guide to the Tax Administration Act, 2011. While SARS is of the

view that it is not necessary to issue a penalty assessment in every instance

where there is an automatic increase in the fixed-amount penalty because

of the taxpayer’s continued non-compliance, it is argued that such a noti-

fication is necessary so as to permit the taxpayer time enough to request

remission of the now increased penalty.

The percentage-based penalty regime merely ‘imports’ into the TAA

the various percentage-based penalties that continue to be provided for

in other tax acts. That is, to the extent that a percentage-based penalty

continues to be imposed by another tax act, for example the Value-Added

Tax Act 89 of 1991, that penalty is treated as being imposed under the TAA.

As a result, the procedures for imposing the penalty and requesting remit-

tance of the penalty, as well as the ambit of the remittance remedy, are

those provided for in the TAA.

1

Independent Contract Specialist, South African Revenue Service (SARS). The views

expressed here are those of the author alone and in no way reflect the views of

SARS or any revenue-raising organ of State.

2

BTCLQ 4(2), June 2013.