One strike penalty for non-submission of income tax returns

The South African Revenue Service (SARS) currently levies an administrative penalty on the non-submission of an income tax return where a natural person has two or more outstanding income tax returns, in terms of section 210(2) of the Tax Administration Act No.28 of 2011.

SARS has recently introduced measures to make it easier for natural persons to comply with their obligation to submit income tax returns, such as issuing auto assessments from the 2020 filing season. Consequently, SARS is relooking at its
response to those taxpayers who are delinquent in submitting their tax returns.

In its draft public notice, issued on 11 August 2021, SARS has indicated that they will levy an administrative penalty where a natural person has one or more returns outstanding for years of assessment commencing on or after 1 March 2020. Hence the administrative penalty will be imposed if the 2020/21 income tax return is not submitted as required, even if no other return is outstanding. 

As transitional measure, the “two or more years” rule will continue to apply for years of assessment commencing on or after 1 March 2006 but ending on or before 29 February 2020. This concession will fall away from 1 December 2022, from which date the one or more years outstanding rule will apply to all natural persons who have failed to submit income tax returns for years of assessment commencing on or after 1 March 2006.

Taxpayers will continue to be able to request remittance of an administrative penalty imposed for a nominal or first of incidence of non-compliance, or if exceptional circumstances rendered a taxpayer incapable of complying.

While it is noted that SARS have made the submission of returns considerably easier, it can take time for taxpayers to gather the necessary data from the various sources of income. Taxpayers should therefore take note of the stricter policy that SARS will enforce for delays in the submission of tax returns and act accordingly.