SARS have just announced their policy regarding potential penalties this filing season. We urge all clients and partners to take very careful note of the following.
The policy for the raising of penalties on employers for the ‘defaults’ in the submission of tax certificates for February 2011, as announced on 12 April 2011, is as follows:
- The administration penalty (a minimum of R250 and a maximum of R 16,000) per tax certificate will not be raised.
- Instead a 10% penalty will be raised on the employer, calculated on the total EMP201 tax values for the full 2010/11 year of assessment. This is done in terms of paragraph 14(6) of the Fourth Schedule.
- The 10% penalty will be raised under three circumstances:
- Late submissions (i.e. submissions received after 3 June 2011);
- Incomplete / inaccurate submissions (i.e. all the tax certificates were not submitted, or mandatory data such as the employee’s income tax number was missing from one or more of the tax certificates);
- Inaccurate submissions.
- Provision has been made for employers to Request a Remission (RFR) for the penalty amount. SARS have made it clear that they do not intend to penalise employers who have made every effort to comply with the tax certificate submission requirements and were prevented from doing so by circumstances beyond their control.
- For late submissions, the 10% will be reduced to 1% if the submission is made 1 month late, 2% if made 2 months late, etc. This will be considered on receipt of a RFR only. The penalty remission can however only occur once. Thereafter the normal processes of Objection and Appeal are available.
- For incomplete submissions, employers will be able to submit mitigating circumstances to SARS to justify the reduction or even the cancellation of the penalty.
- Procedures will be put in place to facilitate the submission of mitigating circumstances by employers to SARS.
- For incomplete submissions (which can include inaccurate data), the position is more complex:
- Only those tax certificates that are incomplete will be penalised – the employer must request mitigation of the penalty by stating the facts and requesting relief;
- There are circumstances under which the employer cannot be reasonably expected to have income tax numbers for all employees (such as employees who were terminated during 2010/11 and can’t be contacted, and ‘asylum seekers’).
- The penalties will only be raised after the employers filing season has closed on 3 June 2011.
- SARS will recover unpaid penalties after three months through the use of the ITA88 process. NB – in these instances the employer’s bank will be appointed as an agent on behalf of SARS.
Once again, we would like to urge all clients and partners to take careful note of these announcements from SARS.