You may be wondering what the worst-case scenario could be if you didn’t submit your personal tax return properly… Other than jail time, and, let’s face it , South African jail certainly is not the place any-one wants to end up there are some pretty hefty penalties. Let’s take a look at what these penalties are and when they come into effect.
This penalty is a percentage penalty and is applied for late payment of tax. If you pay tax late, you may be charged a percentage penalty ranging from 5% to 50% of the tax due for late payment and interest at the prescribed rate. - Read more here.
SARS may apply a fixed penalty amount for the late submission of a tax return. This amount is dependent on the tax bracket of your SARS profile. non submission of tax returns may be subject to a penalty of between R250 – R16000 per month. Depending on the taxable income of the individual. - Read more here.
The Tax Administration Act, No 28 of 2011 (TAA) denotes certain types of transactions that must be reported to SARS. These are called Reportable Arrangements and if they are not reported to SARS, a penalty and interest is implemented. - Read more here.
If you are found to have understated your earnings to avoid paying tax within a certain tax bracket, SARS will implement an Understatement Penalty. This penalty can be implemented over and above any of the previously mentioned penalties and could be up to 200%. - Read more here.
As the Understatement Penalty could be the biggest tax penalty applied, the Venaccuracc team thought we’d take some time to discuss the 6 predetermined behaviours SARS looks out for when deciding if an Understatement Penalty should be applied.
This isn’t a behaviour as much as it is figures in your tax return. Make sure you are recording the right income and expenses in your tax return, and if you’re not sure, give the Venaccuracc team a call here.
SARS statement in this regard is that "reasonable care means that a taxpayer is required to take the degree of care that a reasonable, ordinary person in the circumstances of the taxpayer would take to fulfil his or her tax obligations."
If you’re worried that you may be penalised for not taking reasonable care, then make sure to call the Venaccuracc team here for tax support.
If you are unable to support your tax position with the correct submission of information, then SARS may view your return under the Understatement Penalty behaviour. Make sure you contact the Venaccurac team here to support your tax return submission.
If you have entered an item into your tax return where it appears to be an avoidance arrangement, which is “an impermissible avoidance arrangement if its sole or main purpose was to obtain a tax benefit” then SARS may apply the Undertatement Penalty. If you are unsure about your tax return, then contact the Venaccuracc team here today.
According to the SARS short guide to the TAA Gross negligence is described as “doing or not doing something in a way that suggests a disregard for the consequences.” If SARS views your tax return as being completed with Gross Negligence you may receive an Understatement Penalty. The Venaccuracc team are experts in tax returns and are here to help you make sure your tax return is right.
Tax evasion is defined as illegal activities an individual or organisation take to avoid paying tax. - Read more here.
The Venaccuracc team recognise that, if you are unfamiliar with, or just don’t have time to spend on filling out your tax return, you may find yourself in a situation where your tax return falls into one of these 6 behaviours.
Our team is standing by to assist you to get your tax return right the first time. - Contact us here now.
