EXTERNAL POLICY PENALTIES ADMINISTRATION AND DEBT MANAGEMENT

Transcription

1 EXTERNAL POLICY PENALTIES Revisin: 4 Page 1 f 7

2 1 SCOPE The purpse f this plicy is t prvide guidelines regarding penalties terms f Chapter 15 f Tax Administratin Act 28 f 2011 (the Act). 2 POLICY STATEMENT 2.1 PENALTY GENERAL Penalties are an enfrcement tl used t address nn-cmpliance with the Incme Tax Act and will be impsed either as a fixed amunt penalty r a percentage based nn-recurring penalty.. Penalties will be impsed fr Persnal Incme Tax (PIT) and Pay As Yu Earn (PAYE) Tax related nn-cmpliances nly, at this stage. Debt equalisatin (ffsetting f credits) n an assessed accunt against debits n the administrative penalty accunt is allwed prvided that the penalties transactins are nt under dispute (RFR/NOO/NOA). Once an initial penalty is raised, it is cmmunicated t the taxpayer by means f a Penalty Assessment Ntice (AP34). AP34 has a due date n which the taxpayer must remedy the nn cmpliance and make payment and Failure t remedy and/r make payment by the due date will result in subsequent ntificatins being sent t the taxpayer. AP34 and subsequent ntificatins will be cmmunicated t taxpayers via the fllwing channels: Pst; E-Filing, and E@syfile in the case f PAYE penalties IMPOSITION AND CHALLENGING OF PENALTY Penalties shall be impsed impartially, cnsistently and prprtinately t the seriusness f the nncmpliance, by way f a penalty assessment (AP34). Fr PIT, the administrative penalty will be impsed where the taxpayer: failed t submit a return as and when required under the Act; and failed t infrm the Cmmissiner f a change in address as and when required under the Act; The administrative penalty is a fixed amunt penalty which recurs every mnth that the relevant nn-cmpliance is nt remedied n r befre the due date as per the AP34, fr a maximum f: 35 mnths where SARS is in pssessin f the taxpayer s current address and able t deliver AP mnths where SARS is nt in pssessin f the current address because the taxpayer failed t update his / her details with SARS and SARS is therefre unable t deliver the AP34. Revisin: 4 Page 2 f 7

3 The relevant nn-cmpliance must be remedied n r befre the due date as indicated n the AP34 t prevent recurring administrative penalties frm being impsed. This recurring penalty will be impsed fr every mnth, r part theref, that the nn-cmpliance has nt been remedied. Fixed amunt penalty: The fixed amunt penalty will be based n the taxpayer s taxable incme r assessed lss fr the current r preceding year. If the taxable incme fr the current r preceding year is nt available, the penalty will be levied at lwest value i.e.r250 which is subject t amendment n determinatin f the taxpayer s actual taxable incme n remedy f the nn-cmpliance. The table belw sets ut the fixed amunt penalty relative t a taxpayers taxable incme r assessed lss: 1 Item FIXED AMOUNT PENALTY 2 Assessed lss r taxable incme fr preceding year 3 Penalty (i) Assessed lss R250 (ii) R0 R R250 (iii) R R R500 (iv) R R R1 000 (v) R R R2 000 (vi) R R R4 000 (vii) R R R8 000 (viii) Abve R R PAYE penalties are levied against Emplyers, where the emplyer: Failed t submit a fully recnciled, accurate and cmplete EMP501 t SARS by the due date specified by the Cmmissiner as a percentage penalty. PAYE penalty will be impsed fr 1% f the ttal PAYE payable per mnth in respect f the perid relating t the utstanding EMP501 up t a maximum f 10% and subject t the circumstances f the case, this penalty may be prprtinally remitted depending n the degree f cmpliance. The dispute prcedure fr penalties is tax type fcused. This means that the PIT and PAYE must be disputed independently; i.e. PIT transactins must be nt disputed n the same RFR as the PAYE transactins. A separate RFR frm will have t be submitted t dispute PAYE transactins. Where the penalty impsed shuld nt have been impsed (incrrectly impsed) this shuld be remedied/addressed by a submissin f: Revisin: 4 Page 3 f 7

4 A cmpleted return r A RFR with the reasn Nt Liable. Fr crrectly impsed penalties where nly a remissin is required a cmpleted Request fr Remissin f Penalty (RFR1) frm must be submitted: Hwever, such an applicatin will nly be cnsidered if the nn-cmpliance has been remedied n r befre the due date as prvided n the AP34. The nn-cmpliance des nt need t be remedied where the reasn fr disputing the penalty is: Nt liable, SARS errr r Death/Liquidatin/Sequestratin. In the RFR there must be an explanatin f the exceptinal circumstances which led t the nncmpliance. The RFR will nly be allwed where circumstances beynd the taxpayer s cntrl resulted in the nn-cmpliance. 2.2 PENALTY DEBT GENERAL Payment f the penalty amunt is due within thirty (30) days f the date that the penalty was raised. The due date is indicated n the AP34 that is issued t the taxpayer. Payment f the utstanding penalty amunt des nt abslve the taxpayer frm the bligatin t remedy the nn-cmpliance that gave rise t the penalty. The nrmal SARS payment rules apply fr payment f penalty amunts. Payment can be made utilising any f the fllwing channels: Electrnically via efiling; Electrnically via SARS e@syfile Emplyer in the instance f PAYE Penalties Electrnic payments via the internet; Payment at a branch f ne f the relevant banking institutins, i.e. ABSA, Standard Bank, Nedbank and FNB; Payment via debit rder; r Payment at a SARS branch ffice (cheque payment nly). Cheque payments may nt exceed the ttal amunt f R All payments shuld bear the relevant payment reference number as per the taxpayer s AP34 Penalty Assessment Ntice t ensure allcatin t the crrect accunt. In terms f the Act SARS is entitled t initiate any cllectin prceedings t recver the utstanding penalties, including third party appintment. Such agent appintments can be effected as sn as the taxpayer is in default and has an verdue amunt n his / her penalty accunt. Agents wh can be appinted fr penalties purpse include: Emplyers; Any debtr wh wes the taxpayer mney; Financial institutins, i.e. banks; Attrneys; Medical aids (in case f e.g. dctrs); investment managers per investments; Insurance plicies. Shuld the taxpayer nt agree with the penalty that was impsed against him / her, he / she may Revisin: 4 Page 4 f 7

5 request remissin f the penalty amunt by cmpleting the prescribed frm (RFR) DEFERMENT ARRANGEMENTS Deferment arrangements fr utstanding penalty amunts will be allwed, prvided that the taxpayer has remedied his/her nn-cmpliance. A taxpayer will nt be able t request a deferred arrangement where he / she is already in third party appintment prcess (AA88) unless the agent appintment is cancelled by a cllectin agent where the taxpayer demnstrates that he/she will incur financial hardship and requires a deferment arrangement in excess f 6 mnths and this will have t be apprved by the cllectins team leader. Deferment arrangements fr a perid f less than 6 mnths r less than R des nt require apprval r the submissin f supprting dcumentatins. Deferment arrangements fr a perid lnger than 6 mnths r greater than R require the apprval f the Cllectins team leader and the prf f financial hardship. The taxpayer will have t prvide prf f financial hardship by submitting the fllwing dcuments, amngst thers: Cash flw statement, Incme and expenditure statement fr the last 12 mnths preceding the request; Assets and liabilities statement, Bank statement fr the 3 latest cnsecutive mnths e.t.c A taxpayer can have nly ne active deferred arrangement per perid THIRD PARTY APPOINMENT (AA88) Third party appintments will be applied t all penalty accunts that are: Overdue fr payment i.e. agent appintment is initiated frm the 3 rd ccurrence f the penalty; and Nt subject t a dispute r nt secured via a payment arrangement. AA88 cannt be raised against a taxpayer if he/she has nt been advised / infrmed f the penalty debt bligatin. On submissin f prf that the taxpayer s pstal address is different frm that n SARS recrds and that the AP34 has been delivered t the incrrect address, the AA88 must be cancelled. AA88 cannt be raised against a taxpayer if there is an active dispute (RFR, NOO r NOA) ldged against the penalty debt bligatin. Where the dispute is ldged after the AA88 has been issued; the AA88 must be cancelled as the dispute n the penalty supersedes the cllectin theref. N penalties will be raised against an emplyer/agent fr the late payment f an AA88 debt that was recvered frm a taxpayer/emplyee. Hwever, if n payment is received the case must be fllwed up with the emplyer/agent after a perid f 30 days past the due date n the AA88 Ntice f Agent appintment via the issuing f AA88 Default letter. Nte: If the agent has nt paid ver the penalty amunt t SARS after 30 days frm the default letter, a fllw-up utbund call is made t agent. Revisin: 4 Page 5 f 7

6 2.3 REQUEST FOR REMISSION A RFR will nly be cnsidered if the nn-cmpliance that gave rise t the penalty has been remedied, except in the instance where the taxpayer is nt liable t file r where SARS is at fault i.e. SARS Errr. Where the penalty has been crrectly impsed and there are mitigating reasns that culd justify a remissin, a Request fr Remissin frm (RFR1) must be cmpleted and submitted t SARS. This request fr remissin must be cmpleted n the prescribed frm (RFR) and must include the circumstances / grunds which prevented the taxpayer t cmply with the relevant bligatin under the Act in respect f which the penalty was impsed. A single RFR frm can be cmpleted fr multiple transactins per tax type and if the number f transactins being disputed exceeds the available cntainers n the frm, a new frm shuld be cmpleted. A frm t request remissin (RFR) can be requested via any f the fllwing channels: efiling; e@syfile in the case f PAYE penalties nly At a lcal SARS branch ffice; r SARS Cntact centre n SARS (7277). The RFR can be submitted via any f the fllwing channels: efiling; e@syfile in the case f PAYE penalties nly At a lcal SARS branch ffice; r Pst t SARS, Albertn, If a penalty was incrrectly assessed (nt assessed in accrdance with the regulatins issued under chapter 15 f the Act), SARS may issue a revised assessment within three years f the riginal penalty assessment. A penalty can either be Allwed, Partially Allwed r Disallwed If the taxpayer disputes the utcme f the RFR he / she may bject n the prescribed Ntice f Objectin frm (NOO). 3 REFERENCES 3.1 LEGISLATION TYPE OF REFERENCE REFERENCE Legislatin and Rules Tax Administratin Act, N 28 f 2011: Chapter 15. administered by SARS: Other Legislatin: Prmtin f Administrative Justice Act, N. 3 f 2000: Sectin 6 Internatinal Instruments: Nne 3.2 CROSS REFERENCES DOCUMENT # DOCUMENT TITLE APPLICABILITY GEN-PEN-05- External FAQ - Penalty Management All FAQ01 Revisin: 4 Page 6 f 7

7 4 DEFINITIONS AND ACRONYMS AP34 Penalty Assessment Ntice NOA Ntice f Appeal NOO Ntice f Objectin PAYE Pay As Yu Earn Remit / Remissin T pardn (an ffence); t discharge a prtin f debt r payment. RFR Request fr Remissin SARS Suth African Revenue Service SDL Skills Develpment Levy The Act Tax Administratin Act N 28 f 2011 UIF Unemplyment Insurance Fund 5 DOCUMENT Designatin Name / Divisin Business Owner: Grup Executive: Assurance Audit Plicy Owner: Executive: EBE - Assessment and Service Prtfli Authr: Tebg Mgsana Detail f change frm previus revisin: 1 st Revisin - Penalties Prject 3 rd phase ( ). 2 nd Revisin - Cmments and Input frm stakehlders. 3 rd Revisin Dcument updated frm AS-GN-46 t GEN-PEN-05-POL1. 4 th Revisin - Updated the dcument in terms f Tax Administratin Act Template number and revisin POL-TM-02 - Rev 9 Revisin: 4 Page 7 f 7