Compliance

SARS penalties: What you need to know

Learn how SARS penalties work, how admin penalties are calculated, and what to do if you receive a penalty assessment notice.

March 26, 20267 min read Share

The Tax Administration Act allows SARS to issue penalties when tax returns aren’t submitted on time.

Until recently, these administrative penalties only applied if a taxpayer had two or more outstanding returns between 2007 and 2020.

That changed on 1 December 2021.

Now, even one outstanding return from the 2021 tax year of assessment can trigger SARS penalties.

These penalties are charged monthly and can run for up to 35 months, or 47 months if SARS does not have your registered address.

That means costs can escalate quickly, often catching businesses off guard.

SARS may issue administrative penalties when a taxpayer is non‑compliant with income tax (CIT or PIT), value‑added tax (VAT), or Pay As You Earn (PAYE).

Here’s what we’ll cover:

What is an admin penalty from SARS?

An admin penalty from SARS is a fixed monthly charge applied when a taxpayer fails to meet a tax obligation, most commonly by not submitting a required return.

These penalties are automatic.

Once SARS identifies non‑compliance, it issues a penalty assessment notice and continues charging the penalty every month until the outstanding return is submitted.

SARS admin penalty table and calculation

SARS admin penalty calculation is based on fixed monthly amounts that vary according to your taxable income from the previous year.

SARS uses the following scales to calculate admin penalties, subject to certain conditions:

Assessed loss or taxable income for the preceding year	Penalty
R0 – R250,000	R250
R250,000 – R500,000	R500
R500,000 – R1,000,000	R1,000
R1,000,000 – R5,000,000	R2,000
R5,000,000 – R10,000,000	R4,000
R10,000,000 – R50,000,000	R8,000
Above R50,000,000	R16,000

Scenario

Let’s say your taxable income was R1,250,000 for the preceding year of assessment, with two outstanding income tax returns.

Penalties

SARS will levy a R2,000 fine for each outstanding return every month.

That’s R4,000 in penalties every month.

SARS will keep penalising you until you submit your outstanding returns, up to a maximum of 35 months from the date SARS assesses the penalty (or 47 months if the taxpayer’s address is unknown).

It’s clear that this administrative penalty can quickly become a significant financial burden.

How to fix this

Consider contacting an accountant or tax practitioner to help you get up to date with any outstanding returns.

The first priority is to stop the penalty from recurring.

Submit the outstanding return(s) as soon as possible to prevent additional monthly penalties from accumulating.

Once you’re compliant and the outstanding return(s) have been submitted, you may be able to submit a Request for Remission (RFR).

This is a formal request asking SARS to remit (cancel or reduce) the penalties.

If SARS disallows the RFR or only partially allows it, you may then object and, if necessary, appeal the decision.

Important to note:

There is a misconception that you don’t need to submit returns if your company is dormant.

You must submit zero returns to SARS for dormant companies or risk accumulating penalties.

What happens if I ignore SARS’s notifications?

If you ignore notifications from SARS, it will keep levying the administrative penalties and the company will have a non-compliance tax status.

Can admin penalties be reversed or reduced?

Yes, SARS may reverse or reduce admin penalties through a Request for Remission (RFR).

Success depends on the facts of your case, and approval isn’t guaranteed.

However, approval is never guaranteed.

SARS is more likely to consider remission when:

• This is a first instance of non‑compliance
• The company was dormant and generated no tax liability
• The assessment resulted in a nil payable amount or a refund
• Exceptional circumstances applied, such as serious illness or system errors

If tax is still payable, SARS is less likely to grant full remission, although partial remission is sometimes approved.

When applying for a reversal of administrative penalties, the following questions are asked:

Was the company dormant?

If yes, SARS will generally consider the reversal in favour of the taxpayer since it never lost any tax income.

Did you receive a refund on submitting your income tax return, or was there a zero payable amount?

Again, since SARS never lost out on tax revenue, it will generally consider a reversal in this case.

Did you need to pay money in on your tax assessment?

If you owe SARS money, it’s unlikely to reverse the admin penalties levied.

However, there’s no harm in trying because SARS will sometimes consider partial reversals.

Remember, there is no guarantee that SARS will reverse penalties.

How to pay your SARS penalties

If you agree with the penalty assessment notice, paying it promptly helps you settle what’s already been charged.

But to stop additional monthly penalties from building up, you’ll need to submit any outstanding return(s) as soon as possible.

You can pay SARS penalties through eFiling, electronic funds transfer (EFT), your bank, or a SARS branch.

If you can’t afford to pay the full amount at once, you may be able to apply for a deferred payment arrangement and pay the penalty in instalments.

Better safe than sorry

Prevention is better than a cure.

If your company is dormant but may become active again in future, speak to your accountant or tax practitioner about keeping the company compliant by submitting zero tax returns.

If your company will not actively trade again, receive income and/or incur expenses, ask your accountant or tax practitioner to deregister your company with the Companies and Intellectual Property Commission (CIPC) and with SARS for various types of tax.

Above all else, aim for compliance. It has never been more important.

FAQs

What is the SARS penalty for late submission of a tax return?

SARS charges fixed monthly administrative penalties when a required tax return is not submitted on time.

The amount depends on your taxable income from the previous year and ranges from R250 to R16,000 per month, per outstanding return.

These penalties repeat every month until the return is submitted, up to a maximum of 35 months, or 47 months if SARS does not have your registered address.

How do I check if I have SARS administrative penalties?

You can check your SARS penalties by requesting an Administrative Penalty Statement of Account (APSA).

This statement shows all penalty assessment notices issued against you, including amounts, dates, and transaction numbers.

You can request your APSA through SARS eFiling, by contacting the SARS Contact Centre, or by visiting a SARS branch (appointment required).

Can SARS admin penalties be reduced or cancelled?

Yes, SARS may reduce or cancel admin penalties if you submit a request for remission, but approval is not guaranteed.

SARS is more likely to consider remission if:

• This is your first instance of non‑compliance
• Your company was dormant and generated no taxable income
• Your assessment resulted in a nil payable amount or a refund
• Exceptional circumstances applied, such as serious illness or system issues

You must submit all outstanding returns before SARS will consider your request.

What is a penalty assessment notice from SARS?

A penalty assessment notice is a formal notification from SARS confirming that an administrative penalty has been issued.

It outlines the reason for the penalty, the amount charged, and the period it relates to.

If the underlying non‑compliance is not resolved, SARS will continue issuing penalties monthly until you submit the outstanding return.

Do dormant companies still get penalised by SARS?

Yes. Even if your company is dormant, you are still required to submit zero returns to SARS.

Failing to do so can result in ongoing administrative penalties.

If your company has never traded or earned income, you may be able to apply for remission once you are compliant, but penalties can still be raised in the meantime.

What happens if I ignore a SARS penalty assessment notice?

If you ignore a penalty assessment notice, SARS will continue charging penalties every month and your tax status will remain non‑compliant.

Over time, this can affect your ability to obtain tax clearance and may lead to debt collection actions, including third‑party appointments.

Can I appeal a SARS administrative penalty?

You may be able to challenge SARS’s decision, but the steps matter.

Once you’re compliant and the outstanding return(s) have been submitted, you can submit a Request for Remission (RFR).

If SARS disallows the RFR or only partially allows it, you can object to that decision and, if necessary, appeal.

Because this is a formal, time‑sensitive process, it’s often worth working with a tax practitioner or accountant.

This process is formal and time‑sensitive, so it’s often helpful to work with a tax practitioner or accountant to ensure your objection is correctly submitted and supported.

Editor’s note: This article was originally published in May 2023 and has been updated for relevance.