Penalities for non-compliance

By Melani du Toit and Christopher Renwick Time of article published Nov 9, 2018

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JOHANNESBURG - From December 7, the SA Revenue Service (Sars) will implement a new approach to using information supplied by the Companies and Intellectual Property Commission (CIPC) to determine which companies are not tax-compliant and impose penalties accordingly.

Sars issued an official notice to registered accountants and tax practitioners in October to confirm the announcement earlier this year by Fabian Murray, the acting Sars chief officer, of the implementation of the new line of attack.

The notice, which is signed by acting Sars commissioner Mark Kingon, states that administrative penalties for late corporate income tax (CIT) returns will be imposed on more than 300000 companies. The penalties can range from R250 to R16000 a month.

It is a well known that Sars is short on collection, and as the Tax Administration Act determines a penalty per month of lateness, this will boost their collection.

The law also looks at when a company should have been registered for tax. If you opened a company five years ago and never registered it, the minimum penalty is R250 x 12 months x 5 years = R15000.

However, this minimum penalty is only applicable in instances where a company was dormant, as the law still demands CIPC and Sars compliance. Where a company is active, depending on various factors, the Tax Administration Act will determine the level of penalties.

The directors of companies that are found to be not tax-compliant should rightly feel uneasy as Sars will undoubtedly come after them personally, especially where the company does not have the means to pay penalties, or plainly ignores it. Melani du Toit (senior accountant) and Christopher Renwick (tax attorney) at Tax Consulting.


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