The penalty stick the taxman currently uses to ensure you complete your tax return could hit your pocket harder from January next year.
Finance Minister Trevor Manuel has released draft regulations - the second set - outlining the administrative penalties the South African Revenue Service (SARS) can impose if you do not comply with the law when it comes to declaring your income and paying your dues.
SARS can impose penalties if you, as an individual, do not comply with the Income Tax Act by:
- Failing to register as a taxpayer when you are required to do so;
- Failing to inform SARS that you have changed your address or other details as required;
- Failing to submit a return, or other related documents or information as required;
- Failing to furnish information or documents when you are requested by SARS to do so;
- Failing to answer questions SARS asks you; and
- Failing as a provisional taxpayer to submit estimates of your taxable income.
Currently, there are no set penalties for several of these failures to comply with the law. SARS has been imposing penalties of about R300 the first time you fail to submit your return on time, about R600 for a second failure and a maximum penalty of R1 200.
The new regulations propose that SARS must impose a fixed penalty that is based on your taxable income ( see table).
If you fail to remedy your non-compliance within 30 days of the date by which you are, for example, due to submit a return, the penalty will increase auto- matically by the same amount each month but is capped after three years.
Furthermore, SARS can add interest to the amount you owe in tax from the date on which you were supposed to pay it. The interest is calculated at the official interest rate, which is currently 15 percent.
As a provisional taxpayer, you could also be liable for a penalty equal to 10 percent of the tax you should have paid but did not.
If a penalty has been levied, you can outline to SARS the reasons for your failure to comply with the tax laws and ask that they remit the penalty. If you volunteer information or are a small-scale first-time offender, or if you can prove certain exceptional circumstances, such as a natural disaster, SARS may remit all or part of the penalty.