As the economic needs of the country grow higher, a higher amount of tax is applied on SA citizens (mostly the case). Paying tax is not a choice (although that would be nice), but a mandatory obligation.
In this article we will discuss the SARS compliance model to ensure you and your business are in good standing and to avoid any penalties, as well as the dates to watch out for and some FAQ’s. I’ll also provide practical tips and advice to help you with your compliance.
SARS compliance model
Taxpayers can now receive a Tax Compliance Status PIN instead of a Tax Clearance Certificate which can be used by third parties to verify the taxpayer’s real-time compliance status. This means that where previously a taxpayer was required to submit a paper Tax Clearance Certificate (TCC), the taxpayer can now submit a Tax Compliance Status PIN or a paper TCC. The result of this being that the TCC may not be a true reflection of the taxpayer’s tax compliance status at any point in time. The change is also necessary to combat fraud and corruption with the issuing of a paper-based compliance result.
Penalties for non-compliance
Currently, the penalty is collected only for non-submissions of returns. Taxpayers who do not submit their returns will be charged this penalty and have to pay it to SARS. Administrative non-compliance penalties comprise fixed amount penalties as well as percentage-based penalties. The penalty amount that will be charged depends 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.
Top Tip: Regardless of whether you agree or disagree with the admin penalty it is advisable to submit the outstanding return to stop further admin penalties. The penalty will reoccur for every month the return(s) remains outstanding.
Fixed amount penalties usually apply on the act of non-compliance. The penalties can be made for some of the following situations:
– Failure to register as a taxpayer or otherwise register as and when required under the Act.
– Failure to inform the Commissioner of a change of address or other details as and when required under the Act.
– Failure by a company to appoint a Public Officer, appoint a place for service or delivery of notices and documents, keep the office of Public Officer filled, maintain a place for the service or delivery of notices or to notify the Commissioner of any change of Public Officer or of the place for service or delivery of notices as and when required by the Act.
– Failure to submit a return or other related documents or information as and when required under the Act.
– Failure to furnish, produce or make available information, documents or things as and when required under the Act.
– Failure to reply to or answer a question put to a person as and when required under the Act.
– Failure to attend or give evidence as and when required under the Act.
– Failure by an employer to notify SARS of a change of address or the fact of having ceased to be an employer as and when required under the Act.
– Failure by an employer to submit a monthly declaration of employee’s tax as and when required by the Act.
– Failure by an employer to provide details of an employee.
– Failure to deliver an employee’s tax certificate to one (or more) employee(s) or former employee(s) as and when required by the Act.
– Delivery by an employer of an employee’s tax certificate in contravention of the requirement that the employer must first render an employee’s tax return as and when required by the Act.
– Failure by a provisional taxpayer, who is liable for the payment of normal tax in respect of an amount of taxable income derived by the provisional taxpayer during a year of assessment, to submit an estimate of taxable income as and when required by the Act.
In addition to any other penalties, interest or charges that a taxpayer may be subject to under the provisions of the Regulations or the Act, the Commissioner may impose a penalty equal to 10% of the:
– Amount of employee’s tax that an employer fails to pay as and when due under the provisions of the Act.
– Total amount of employee’s tax deducted or withheld or that should have been deducted or withheld by an employer from the remuneration of its employees where the employer fails to submit an employee’s tax return as and when required under the Act, or
– Amount of provisional tax that a provisional taxpayer fails to pay as and when required under the Act.
Pro tip: Compliance might sound overwhelming, so it’s best to consult a registered tax professional so they can audit your accounts accurately and effectively and guide you through certain processes that require tax payment procedures.
The deadline for non-provisional taxpayers has been brought forward to allow more time for finalizing audits before the year ends.
Manual – post or at SARS branch drop boxes 21 September 2018, Type: Non-provisional and provisional
eFiling or electronic filing at SARS branch 31 October 2018, Type: Non-provisional
eFiling 31 January 2019, Type: Provisional
All businesses that are required to register for PAYE, must follow the schedule below:
Monthly – the EMP201 must be submitted monthly – by the 7th of the following month or the Friday* before that day if the 7th falls on a weekend or public holiday.
Interim (for period 1 March to 31 August) – the Interim Employers Tax Season for EMP501 reconciliations runs from 1 September to 31 October
Annual (for period 1 March to 28 February) – the annual Employers Tax Season runs from 1 April to 31 May.
Tax Season – Companies, including CC’s, Co‐operatives and Body Corporates, are required to submit a Return of Income: Companies and Close Corporations (IT14) within 12 months from the date on which their financial year ends.
Manual – submission of the VAT201 and payment must be done by the 25th of the month. It should be noted that each vendor may be on a different VAT cycle
Electronic (eFiling) – submission and payment of the VAT201 must be done by the last business day of the month
Small businesses which fall into one of the categories (CC, Co-operatives) must follow the schedule outlined.
Turnover tax: Small businesses which are registered for Turnover Tax must follow the schedule below:
Turnover tax will be levied annually on a year of assessment that runs from the beginning of March of the one year to the end of February of the following year. It will include two six-monthly interim (provisional) payments.
For a more in depth look at deadlines, you can refer to the SARS website here: http://www.sars.gov.za/Pages/Important-Dates.aspx
General Pro Tips:
Don’t forget about income you may have earned passively such as interest, dividends or capital gains you may have made. Be sure to get your tax certificates – known as an IT3b and IT3c – from your bank or investment house so you can declare the income on your tax return.
When completing your tax return, be very careful with the information you are including. Double check that all information is correct against any documents that you have. Sars can penalise for the errors they call “failure to take due care” in completing your return.
Make sure that all the relevant documents are submitted the first time.
Avoid re-filing the return and if this is required, consider seeking professional assistance.
Keep all documents in an audit file for a period of at least 5 years.
Be diligent and submit your tax return early.
Use only a registered tax practitioner.
Read all Sars’s correspondence.
Keep a record of expenses and invoices.
This article is for information purposes only and you are advised to seek professional advice from your own accountant as your individual situation will vary.