Overview

During February 2019, Judge Molemela in the Supreme Court of Appeal in Purlish Holdings v CSARS, had to decide whether the Tax Court was entitled to increase the understatement penalties levied by SARS. 

From the beginning of this year, SARS started levying non-compliance penalties, following the issuing of a public notice, where companies failed to submit returns of income. 

In this webinar, we will deal with the levying of the administrative non-compliance penalties and the understatement penalties. Specifically, when SARS must impose a penalty, how it is calculated and what remedies are available to the taxpayer. 

If a tax debt is not paid in full by the effective date, interest accrues, and is payable, on the amount of the outstanding balance of the tax debt. The webinar will deal with the general interest rules and when the taxpayer can request for the interest not to be payable.

Course Content

SARS’s entitlement to levy penalties

The administrative non-compliance penalties:

• Non-compliance subject to penalty.
• The fixed amount penalty and the percentage based penalty.
• Procedures for imposing penalty.
• Procedure to request remittance of penalty.
  • Timing of the request.
  • Using the efiling system.

The understatement penalty:

• What is an understatement?
• How is the penalty calculated?
  • prejudice to SARS or the fiscus;
  • Calculation of the short-fall;
  • The behaviour; and the
  • Understatement penalty percentage table
• The remedies:
  • Objection and appeal against imposition of understatement penalty.
  • Voluntary disclosure.
• Can the courts increase the penalty imposed by SARS

Interest

• General interest rules.
• Rate at which interest is charged and period over which interest accrues.
• When can SARS direct that interest is not payable by the taxpayer?
• When can an amount of interest paid to SARS be deducted from that person’s taxable income?