We have a client which has to pay Admin Penalties. We submitted RFR for all the admin penalties. SARS is not writing off the amounts because the client had too many IRP5's for that period. Is that really a clause in the Tax Act?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
Indirectly it is. In terms of section 66(1) of the Income Tax Act, the Commissioner must annually give public notice of the persons who are required by the Commissioner to furnish returns for the assessment of normal tax within the period prescribed in that notice. SARS issues the notice, to persons required to submit returns for the relevant year of assessment terms of section 25 of the Tax Administration Act, 2011.
In terms of section 215(1), of the Tax Administration Act, a person who is aggrieved by a 'penalty assessment’ notice may, on or before the date for payment in the 'penalty assessment', in the prescribed form and manner, request SARS to remit the 'penalty' in accordance with Part E. We don’t know what your grounds for the request were, but accept that SARS refused to remit the penalty or a part of the penalty. We agree that fact that “the client had too many IRP5's for that period” is merely confirmation that the taxpayer was obliged to submit the returns in question.
Paragraph 3(1), of these notices, provides for the circumstances under which a return is not required. It, with respect to the more than one IRP5 comment, requires that “the gross income of that person consisted solely of gross income”, remuneration “paid or payable from one single source, which does not exceed” the amount provided in the notice (for 2019 it is R500 000) “and employees’ tax has been deducted or withheld …”
Under section 220, of the Act, a decision by SARS not to remit a 'penalty' in whole or in part is subject to objection and appeal under Chapter 9. The next step would then be to object to SARS’s decision. An objection must, under section 104, read with the rules, be made within 30 business days after the date of the decision. Section 104(5) allows for SARS to condone a late objection, but you will have to satisfy a senior SARS that exceptional circumstances exist which gave rise to the delay in lodging the objection (section 104(5)(a)).