Penalties for late lodgementof Tax Returns

The Tax Administration Act provides for non-compliance penalties.

This would include failure to lodge annual tax returns within the

prescribed period. To date, these late lodgement penalties have

only been imposed and charged by SARS in cases of extreme

default. A copy of a recent SARS circular is set out below.

The main points are as follows:

1. The notice applies only to Corporate Income Tax Returns. This includes Close Corporations. In principle however, the same penalties can be applied to natural persons and we have seen examples in the past.

2. Corporate Tax Returns must be filed with SARS not later than 12 months after the year end of the Company/Close Corporation.

3. Dormant companies are also required to submit annual tax returns.

4. The penalty is imposed monthly i.e. the lowest penalty for a tax return lodged 12 months late is R250 x 12 = R3 000.

5. The penalties will be charged automatically from December 2018 onwards.

The penalties “will be imposed on companies that receive a final demand to submit a return”. This seems to imply that, if a final demand is not issued, no penalties will be imposed. We strongly recommend that you do not rely on this apparent concession. The Act does not provide that the penalties can only be imposed after failure to respond to a final demand.

Please treat this warning with the seriousness it deserves as non-compliance can become very costly.