Page 57 - Nexia Cape Town 2018 TG Digital

Percentage based penalties
The percentage based penalty is imposed where SARS is satisfied that the
taxpayer has not paid the tax as and when required under a Tax Act� This penalty
is equal to a percentage of the tax not paid� The following percentage based
penalties will be imposed:
Tax type Penalty percentage
Income tax 10% under certain circumstances (i�e� sec 35A)
Provisional tax ■ 10% on the late or non-payment of provisional tax
■ 20% if provisional tax estimate has been understated
(the non-submission of the return within four months
after year-end is deemed to be a submission with an
estimate of Rzero)
Employers’ and ■ 10% if return has not been filed
employees’ tax ■ 10% if employee tax and/or UIF has not been paid
■ 10% if fringe benefits have not been indicated on
employee’s tax certificates
Value-Added Tax 10% on the late payment of VAT

Understatement penalties
The understatement penalty is a percentage in accordance with the table set out
below and is applied to the shortfall of the tax� It applies to all taxes and could
be charged when there is a default in rendering a return, an omission from a
return, an incorrect statement in a return and, if no return is required, the failure
to pay the correct amount of tax� Excluded from the understatement penalties are
penalties resulting from a “bona fide inadvertent error”�
The following definitions relate to the understatement table below:
■ Substantial understatement means a case where the prejudice to SARS
or the fiscus exceeds the greater of 5% of the amount of ‘tax’ properly
chargeable or refundable under a Tax Act for the relevant tax period, or
R1 000 000
■ Repeat case means a second or further case of any of the behaviours listed
under the table above within five years of the previous case
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