Taxpayers get penalty surprises

Several taxpayers have complained about receiving penalties for being non-compliant in the submission of tax returns for prior tax years.

The penalties ranging between R500 and R2 000 have been issued mainly for the non-submission of returns, despite taxpayers claiming that they were not required to file tax returns.

The South African Revenue Service (Sars) did not acknowledge these complaints, saying they will require specific cases to be able to investigate.

Sars spokesman Sandile Memela, says it is advisable for taxpayers concerned to contact them with their specific cases.

He says the rules and applications for administrative penalties have not changed. Taxpayers who do not submit returns are charged with a penalty, which can range from R250 to R16 000 per month, depending on the taxable income of the taxpayer.

This penalty will reoccur for every month the return remains outstanding, Sars indicates on its website.

“Regardless of whether you agree or disagree with the penalty, it is advisable to submit the outstanding return to stop further admin penalties,” the agency says.

Malebo Moloto, technical advisor at the South African Institute of Tax Professionals (Sait), says they have been receiving complaints from their members relating to the penalties since last week.

“It appears that the returns were never required, yet they (the taxpayers) are getting penalty assessments. It seems there is not clear communication or understanding about the reasons for the penalties,” says Moloto.

She has recommended that Sait’s members look at the particular year for which the taxpayer is now receiving penalties for non-submission and to determine whether the taxpayer was actually required to submit a tax return.

TaxTim director Marc Sevitz says they are aware of Sars imposing penalties on “old returns not submitted” in the last few years. In the majority of cases they have encountered, the taxpayers were not required to file a return.

“It is quite concerning because people who thought their income was below a particular tax year’s threshold did not file returns. Many no longer have the necessary information to prove that they did not need to file a return.”

He says the five-year rule, where taxpayers have to keep their documentary proof, only relates to returns that were filed and assessed.

Sevitz says the penalties that they have encountered were mainly for one month – which can range between R250 and R16 000 – depending on the taxable income.

Sars has a questionnaire on its website, which asks several questions to determine whether a taxpayer is required to file a return or not.

These questions include whether the person is conducting a trade, received an allowance such as a travel, subsistence or office bearer allowance, whether the person held any funds or assets outside South Africa above a certain value, or whether the person had a capital gain or loss exceeding a specific amount.

For this year, taxpayers whose gross income – in the form of salary or wages – comes from one single source and does not exceed R350 000 don’t have to file a return.

However, that threshold has been adjusted quite often.

In the 2009 tax year, anyone earning a salary or wages of less than R60 000 a year did not have to submit a return.

Moloto says if it was not required to file a return, yet the taxpayer has been issued a penalty assessment, taxpayers or their tax advisors should file a request for the remission of the penalties by way of the electronic filing system (eFiling). They can also do it at a Sars branch.

Memela says if the request for remission is disallowed or only a portion was allowed, taxpayers may still object to the decision made by Sars and even appeal the decision if they disagree with the outcome of the objection process.

However, the objections process will only be available once the request for remission has been submitted and considered.

Sevitz recommends that people always submit a tax return, whether it is required or not. “Look at what happens years later to people who thought they were not required to file a return.”

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