Tshepo Khoza, Registered Tax Practitioner
"Will SARS Penalise Me?" A Guide to Administrative Penalties
Scared of SARS penalties? Understand the two most common: late filing and late payment. Learn how much they cost and how to get them waived.
Receiving an unexpected SMS or email from SARS about a "penalty" can be a stressful experience. But don't panic.
In most cases, this is an "administrative non-compliance penalty," or "admin penalty." This is not a criminal charge. It's a fine SARS issues to encourage taxpayers to submit their returns and pay on time.
It's crucial to understand what these penalties are for, how they are calculated, and how you can get them waived.
The 2 Most Common Admin Penalties
1. Penalty for "Failure to Submit" (Late Filing)
This is the most common penalty. SARS charges you for every month that your tax return (your ITR12 or IRP6) is outstanding.
- How it's Calculated: It is a fixed-amount penalty charged per month. The amount is based on your taxable income and ranges from R250 up to R16,000 per month.
- The Danger: This penalty is recurring. It stacks up every single month your return remains late, for up to 35 months. Ignoring a single late return can quickly turn into thousands of Rands in penalties.
2. Penalty for "Late Payment"
This penalty is charged when you fail to pay your tax liability by the due date. This applies to your provisional tax (IRP6) payments or your final "top-up" payment on your ITR12.
- How it's Calculated: This is a percentage-based penalty.
- 10% of the total tax amount you failed to pay.
- The Double Whammy: On top of the 10% penalty, SARS will also charge interest (at the official prescribed rate) on the outstanding amount, calculated from the day it was due.
"I Have a Penalty. What's My Action Plan?"
Do not ignore the notification. The problem will only get worse.
Step 1: Comply First!
You cannot dispute a penalty if the underlying problem isn't fixed. Before you do anything else, you must:
- File the outstanding return(s).
- Pay the outstanding tax (the capital amount, not the penalty or interest). If you can't pay it all, at least file the return.
Step 2: Request for Remission (RFR)
Once you have complied, you can dispute the penalty by submitting a "Request for Remission" (RFR) on your eFiling profile. This is you formally asking SARS to waive the penalty.
How to Get a Penalty Waived
SARS does not have to waive your penalty, but they often will if you have a valid reason. "I forgot" or "I was busy" are not valid reasons.
Valid reasons for remission include:
- "First-Time Offender": If this is your first-ever instance of non-compliance, you can plead your case as a first-time mistake. SARS is often lenient in this case.
- Exceptional Circumstances: You couldn't comply due to reasons beyond your control, such as:
- Serious illness or hospitalisation
- Recent death of an immediate family member
- You were out of the country for an extended period with no access to eFiling
- Objective Reasons: Something made it impossible for you to comply, for example:
- The eFiling system was down on the deadline day.
- You didn't receive your IRP5 from your employer in time (and can prove it).
The Key Takeaway: Always comply as fast as possible, even if you're late. Then, file a Request for Remission immediately. The longer you wait, the bigger the problem gets.
Disclaimer:This article is for informational purposes only and does not constitute financial or tax advice. Tax laws are complex and subject to change. We strongly recommend consulting with a registered tax practitioner to address your specific circumstances. TaxClaw.ai is a tool to assist you in managing your tax obligations and is not a substitute for professional advice.