The South African Revenue Service (SARS) is giving admin penalties on taxpayers’ accounts, even if they do not meet the criteria for filing a tax return.

According to William Louw from Sable International, SARS has issued penalties worth R381 million on close to 700,000 taxpayers for late returns this year alone.

Louw said that those who fail to file and pay their tax returns on time are charged interest for late filing or failure to file.

Multiple taxpayers who have emigrated are also still receiving the penalty notice, even if they are not required to lodge these returns.

Louw said that taxpayers have the right to request a waiver on reasonable grounds within 30 days of the notice being issued, with several options to protest against SARS’s penalty.

For instance, taxpayers can file a request for a penalty waiver from SARS.

SARS previously said that taxpayers who earn less than R500,000 and who only earn income from which Pay As You Earn (PAYE) tax can be deducted are exempt from filing returns – resulting in many people who believe that they do not need to file being penalised for failing to do so.

Louw recommended that taxpayers still file their returns to show that they do not owe any tax and then request a remission of the fines.

“A Request for Remission (RFR) can be submitted when a taxpayer disputes any penalty levied due to non-compliance. You can do this by navigating to the penalty statement via your SARS e-Filing account,” Louw said.

However, SARS will force the taxpayer to fix the default when they are actually at fault.

He said that taxpayers can protest the penalty with the following arguments:

• I am not liable to file – I have lodged the return requested, and I had no income to deduct, so no return was required.
• Other – I have lodged the outstanding return as requested, the amount is under R2000, and it was my first offence.
• Alternatively, any similar type of argument (as permitted above).

Living abroad

Louw noted that South Africans living abroad are not automatically classified as non-tax residents when they leave South Africa, adding that those living abroad can be taxed on foreign remuneration that exceeds a R1.25 million threshold.

He said that if the person has tax emigrated, they need to ensure that they have received a confirmation letter from SARS confirming this.

For those who completed tax emigration before 1 January 2022 and have not received a confirmation letter from SARS, it is possible that they are still considered tax residents in South Africa or that SARS has cancelled the previous application without telling the taxpayer – the letters only started to be sent from the aforementioned date.

He added that those who do not need a SA tax number should try and deactivate it after receiving their non-residency letter to avoid further complications.

Ending the tax number confirms to SARS that the taxpayer no longer has any taxable assets or income streams in South Africa, meaning they do need to file tax returns.

For those with active tax numbers, Louw recommends that they continue to file their annual tax returns for the foreseeable future until SARS’s systems are updated, which can take a minimum of 18 months. This will prevent future admin penalties that the taxpayer would have to challenge.