[Question] SARS Provisional tax late submission penalty

[Mark Atkinson]

Hi all,

Does anybody have any experience with late/non-submission penalties relating to provisional tax?

Long story short: We messed up this year with provisional tax. We were a month late on submission because things were insanely busy and it just got away from us. When we submitted our returns we factored in what I thought was the applicable penalty and interest (10% of the provisional tax payment + 10.5% interest).
Now a few months down the line when submitting my ITR12, I get my assessment back and see that SARS has knocked me with a pretty hefty penalty for late/non-submission of provisional tax returns. I can't for the life of me understand why it's so high. (It's roughly 75% of my 2nd provisional tax payment - the one which was late and around 25% of my total tax payable for the year.) In addition, they don't seem to have considered the fact that we already paid a penalty earlier.

Does anybody have some information for me that can explain why I'm being charged so much, or whether it's possibly a mistake on their behalf?

I've lodged a notice of objection in the mean time, requesting that they clarify, but would like to know if I have a leg to stand on when they actually do get back to me.

Thanks in advance!

Mark

[CLIVE-TRIANGLE]

Mark, this article explains the changes from this year, but also explains how it worked up to that point.
http://www.iol.co.za/business/person...2#.Vda_gvnzrcs

[Dave A]

So ultimately late submission has become a greater sin than underestimation?

[Mark Atkinson]

Mark, this article explains the changes from this year, but also explains how it worked up to that point.
http://www.iol.co.za/business/person...2#.Vda_gvnzrcs

Thanks Clive. I did see that article which is why I am so confused.

Is the penalty based on your provisional tax payment assessed amount or your entire year's normal tax assessment?

I'm happy to pay 20% of my provisional tax amount as that is still only a quarter of what they're billing me for at the moment...

[CLIVE-TRIANGLE]

Mark it would be of the total normal tax assessment.

* Late payment of provisional tax: a penalty of 10 percent on the assessed amount you owe;

* Late submission of a provisional tax return: a penalty of 20 percent of what you owe

I presume they applied the 2nd item.

[dellatjie]

Moral of the story: submit your return before 28 Feb, even if you do not have accurate figures, then at least you missed the late payment penalty.

But file a NOO, and explain your situation, you just might be lucky.

Just check the calculation though, as I have caught SARS out miscalculating penalties before...

[Mark Atkinson]

Quick update:

After consulting with my firm's tax department, nobody could come to a solid conclusion about whether SARS was calculating the penalty correctly.
The paragraph of the 4th schedule in question has recently been repealed and is subject to much debate. We discussed this at length and eventually decided it was probably not best to keep telling SARS they are wrong.

So what I ended up doing was pleading my case in terms of fairness, while citing the controversial nature of para 20A and the fact that it states the commissioner may be lenient and reduce or remit the penalty entirely if he doesn't believe the tax payer was attempting to evade tax.

Well, it worked! They allowed my NOO and completely reversed the penalty.

Happy days.

[dellatjie]