Expert says the judgment provides more clarity for the revenue service and tax practitioners
A recent court judgment offered valuable insights into the factors the SA Revenue Service should consider when determining if there are reasonable grounds to remit a penalty levied against a taxpayer.
The Tax Administration Act allows discretional powers for Sars to remit penalties in certain instances. Beatrie Gouws, head of stakeholder management and strategic development at the SA Institute of Taxation, says the judgment provides direction and clarity on what is still in legislative terms a fairly new piece of legislation.
Cliffe Dekker Hofmeyr associate Louise Kotze says Sars is known for its “stringent approach” to imposing penalties. “Compliant taxpayers who encounter difficulties while trying to maintain their compliance status are often heavily penalised, despite their best efforts,” she wrote in their monthly tax and exchange control alert.
The company obtained an overdraft and received additional financial support but could only pay Sars on January 8. Sars argued the payment was due on January 5 and levied the 10% penalty on the amount owned. In this case, the payment was due on January 6 2018, which was a Saturday. The failure to make the payment on the Friday triggered the penalty.
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