Circumstances where negligence can lead to a criminal offence for a taxpayer

Circumstances where negligence can lead to a criminal offence for a taxpayer

Business, Legislation, Tax

The Tax Administration Laws Amendment Act (TALA) now provides in s234(2) for the following circumstances where a taxpayer could face criminal charges if they are negligent.

(2) Any person who wilfully or negligently fails to—
 (a) register or notify SARS of a change in registered particulars as required in Chapter 3;
(b) appoint a representative taxpayer or notify SARS of the appointment or change of a representative taxpayer as required under section 153 or 249;
(c) register as a tax practitioner as required under section 240;
(d) submit a return or document to SARS or issue a document to a person as required under a tax Act;
(e) retain records as required under a tax Act;
(f) furnish, produce or make available any information, document or thing, excluding information requested under section 46(8), as and when required under this Act;
(g) attend and give evidence, as and when required under this Act;
(h) comply with a directive or instruction issued by SARS to the person under a tax Act;
(i) disclose to SARS any material facts which should have been disclosed under a tax Act or to notify SARS of anything which the person is required to so notify SARS of under a tax Act;
(j) comply with the provisions of sections 179 to 182, if that person was given notice by SARS to transfer the assets or pay the amounts to SARS as referred to in those sections; or
(k) in the event where that person becomes liable to make a payment for withholding any tax, deduct or withhold or pay to SARS the amount of tax, as and when required under a tax Act, is guilty of an offence and is liable, upon conviction, to a fine or to imprisonment for a period not exceeding two years.’.

Some examples hypothetically speaking of when a taxpayer could face criminal charges:

  • For failing to inform SARS of any change of postal, physical or electronic addresses, representative taxpayer and banking particulars;
  • Failing to submit a tax return when required to do so or failing to submit documents when requested to do so by SARS;
  • Failing to keep records for the required period of time;

This is a very powerful section of the Act giving SARS significant powers. Our concern is most taxpayers have very little knowledge of the income tax act and are very reliant in many cases on tax practitioners. However, we know many individuals cannot afford tax practitioners creating significant risk for themselves.