A new set of tax law amendments, signed by President Cyril Ramaphosa, and promulgated on January 20 2021 has granted SARS all the legal fire power it needs to impose criminal sanctions on taxpayers who neglect their tax affairs.
Prior to the promulgation of the Tax Administration Laws Amendment Act, 2020 (Amendment Act) a mistake made by a taxpayer was only a crime when it was done “wilfully and without just cause.” In other words, the law required an element of intent; where negligence or ignorance caused your administrative non-compliance, you would have gotten off with a slap on the wrist.
Henceforth, your intention does not matter – where you “negligently” fail to comply or make certain mistakes on your taxes you commit an imprisonable criminal offence. Ignorance, a defence commonly used by taxpayers, will no longer fly – SARS will from now on hold you to a higher standard of care.
Strategically speaking, this is a bold, brilliant move from the SARS-Treasury team, as the simple inclusion of the word “negligence”, now allows for the offence criteria to be broadened to such a degree that even the slightest mistake made in one’s compliance could result in criminal prosecution.
The 11 Mistakes
As the saying goes “we all make mistakes,” but when it comes to mistakes on your taxes each of the 11 mistakes listed in the Amendment Act can result in up to 2 years in prison. So, it is vital that you educate yourself on precisely what they are to remain unmistakably compliant and lawful.
What are they?
- Failure to register your details with SARS or to notify them of any changes to your details;
- Failure to appoint a representative taxpayer or to notify SARS of such appointment or a change in representative taxpayer;
- You receive compensation for assisting someone with their taxes and you fail to register with SARS as a tax practitioner;
- Failure to submit a return when required to do so;
- Failure to retain all relevant substantiating records;
- Failure to provide any information as and when requested by SARS to do so;
- Failure to appear and comply when you are requested by SARS to attend a meeting or a hearing in order to give evidence;
- You are issued with a directive or instruction by SARS and you fail to comply with it;
- You fail to disclose any material information to SARS or you fail to provide SARS with any notification as required under any tax Act;
- You are notified by SARS to pay an amount on another taxpayer’s behalf in settlement of a tax debt and you fail to do so; or
- You have a withholding obligation and you fail to withhold or deduct the tax correctly and pay it over to SARS.
The only way to avoid a mistake is to not make it
The Amendment Act just demonstrates that the new SARS Commissioner and the SARS-Treasury team have adopted a complete no-nonsense approach to non-compliance.
Given how easily (and how often) these mistakes can happen, and how hard they will be to correct, taxpayers should exercise extreme accuracy and vigilance when filing their taxes.
It may serve you well to appoint a qualified tax consultant or experienced tax attorney to ensure you do not end up on the wrong side of these new rules.
Authored by: Roxanna Naidoo, Admitted Attorney and Lisa Mihalik, tax and legal administrator at Tax Consulting SA