An Administrative Penalty (Admin Penalty) is a penalty levied under Section 210 of the Tax Administration Act (TAA).

As at the 1st December 2021 SARS can raise penalties on late submission of tax returns. Currently the penalty is imposed in respect of the following:

  • For individuals the penalty will be imposed where the taxpayer has failed to submit a return as and when required under the Income Tax Act for years of assessment commencing on or after 1 March 2006 where that person has two or more outstanding income tax returns for such years of assessment
  • For companies the penalty will be imposed where the company has failed to submit an income tax return as and when required under the Income Tax Act for years of assessment ending during the 2009 and subsequent calendar years, where SARS has issued that company with a final demand referring to the public notice and requiring the submission of the outstanding income tax return, and the company failed to submit the return within 21 business days of the date of issue of the final demand.

The administrative non-compliance penalty for the failure to submit a return comprises of a fixed amount based on a taxpayer’s taxable income and can range from R250 up to R16 000 a month for each month that the non-compliance continues.

Administrative penalties recur each month that the taxpayer is non-compliant, up to a maximum of 35 months.

TIP OF THE MONTH: Regardless of whether you agree or disagree with the admin penalty it is advisable to submit the outstanding return to stop further admin penalties.

IN CASE YOU MISSED IT:

Our Minister of Finance, Mr. Enoch Godongwana has delivered his first maiden budget speech for the 2022 / 2023 fiscal year on Wednesday, 23 February 2022.

Tax rates for the coming tax year 2022 / 2023 are set to remain largely the same (other than for inflationary related adjustments to personal income tax tables and the usual increases to excise taxes).

These were the 2022 tax related highlights.

1. Government has granted some tax relief by adjusting personal income tax brackets and rebates for the   effect of inflation. The tax-free threshold increased from R87 300 to R91 250 for under 65 years old.

2. No change to capital gains tax rates.

3. No increase in VAT.

4. Company tax lowered to 27% for tax years ending on or after 31 March 2023.

5. No changes to the general fuel levy and Road Accident Fund levy.

6. Excise duties on alcohol and tobacco will increase between 4.5% and 6.5%.

7. Sugar tax on beverages has increased by 0.1 to 2.31 cents per gram of sugar from 1 April 2022.

 8. The medical tax credit increased to R347 for the main member and first dependent and R234 for each additional dependent.

Article credit to: Alchemy Financial Services Inc – Tax Department (May 2022)

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