Administrative Penalties for Corporate Income Tax (CIT) to be imposed.

SARS will be imposing administrative penalties from January 2019 for outstanding Corporate Income Tax (CIT) returns and not the 07 of December as originally communicated.

Administrative penalties will be imposed on companies that receive a final demand to submit a return. In terms of Section 210 of the Tax Administration Act of 2011, non-compliance with regards to non-submission of required CIT returns may be subjected to a penalty, as follows:

• If SARS is satisfied that noncompliance by a person referred to in subsection (2) exists, excluding the non-compliance referred to in section 213, SARS must impose the appropriate ‘penalty’ in accordance with the Table in section 211.
• Non-compliance is failure to comply with an obligation that is imposed by or under a tax Act and is listed in a public notice issued by the Commissioner, other than:
  • the failure to pay tax subject to a percentage based penalty under Part C; or
  • non-compliance subject to an understatement penalty under Chapter 16.

The penalties range from R250 to R16 000 per month that non-compliance continues, depending on a company’s assessed loss or taxable income. Companies that have outstanding CIT returns are requested to submit their return to SARS before the end of November 2018 to rectify non-compliance and prevent penalties being imposed.

Please note that it is compulsory for registered companies to submit their income tax returns. If a company is dormant, it is still required to submit any outstanding returns prior to 2018 to prevent a penalty being imposed. The criteria for the exception in 2018 are set out in Notice 600 of 15 June 2018.