Wednesday, April 8, 2009

“3 Bags Full, Sir”

The general decline in the economy has not left SARS unscathed. Faced with lower receipts it has scouted around for a way to relieve the pressure. One of those ways, which is also designed to increase the level of compliance generally, is to focus on administrative penalties.

Previously these were of the order of R200 for things like failing to render a return timeously, forgetting to lodge a provisional tax form even if no tax was due, failing to declare tax free income, or failing to register a trust as a taxpayer when it had no income.

Now SARS has introduced, with effect from the last day of 2008 a new section 75B. This provides for penalties for non-compliance with a procedural administrative action or with a duty imposed or requested in terms of the Income Tax Act.

There is now a sliding scale. So if one has made an assessed loss the previous year, or one has nil income, or if one’s income is below R250k (k=1000, as in kilo), the penalty is a modest R250. Up to R1m income the penalty is R1000. Above that it rises to a maximum of R16k for incomes above R50m (this is clearly relevant to large companies). However, such penalty is for each offence and for each month the offence remains unrectified, up to a maximum of 35 months, or if involves failure to change an address, 47 months. That’s 47 times R250.

Non compliances committed before 1 Jan 2009 are deemed to be committed on April Fools Day 2009. Now who’s the Fool?

Clive Hill
Financial Services Manager


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