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SARS is known to levy heavy penalties for non-compliance where underestimated and late income tax payments are concerned. Interest is also imposed on taxpayers until their outstanding amount is paid in full. Depending on the severity of the situation, taxpayers can face penalties up to 200% of their total owed value and are charged interest at approximately 10% per annum.
Due to these steep penalties, individuals should endeavour to stay compliant with SARS regulations. If taxpayers become aware of the fact that they have been noncompliant, they should contact a tax consultant as soon as possible to rectify their error. If this is done, taxpayers can possibly avoid penalties and/or interest if their outstanding liability is paid in full and they have followed the correct process when doing so.
Common mistakes to avoid
For first time taxpayers, some typical mistakes include:
- Making a late payment
- Underestimating your payable tax
- Late submission of tax returns
- Late payment and underestimation of payable tax
New filers are also often unaware of their obligation to file tax returns and hence are late in doing so, or do not file at all. To avoid this, individuals should be aware that provisional taxpayers are required to declare their taxable income within 6 months of the tax year, and their total estimated income before the end of the tax year. The South African tax year runs from 1st March to the 28th/29th of February into the following year.
At MMS Group we take a personalised approach to our tax consultancy services. If you require reliable assistance for your income tax matters, please feel free to get in touch with our team.