Penalty On Non-Payment Of Advance Tax In South Africa

By Dave Nyam •  Updated: 01/23/24 •  5 min read

With advance tax, you can pay your income tax in bits during the year instead of all at once. It is non-permanent, grounded on what you will receive for the year.

You must pay advance tax if you have earnings not from a salary, like from a business, a rental, an interest, a dividend, a capital gain, etc.. The same goes if you have a salary from an employer that does not pay employees tax, like a foreign company or an embassy.

- ADVERTISEMENT -

Based on your expected income, you must pay advance tax twice a year, by 31 August and 28 February. You can also pay a third time by 30 September, after the year is over but before SARS checks.

You may get fined or charged interest if you pay too late or too little. This article explains the fines and interest, the penalty code, the late and self-assessment tax penalty, and how to see and pay your SARS penalty.

Penalty on non-payment of advance tax

SARS will fine you if you don’t pay advance tax on time or pay too little. The fine is a percentage of the gap between the normal tax you owe and the advance tax you paid for the year.

The fine rate for not paying advance tax is 10% unless you can show that you did your best to estimate your taxable income and did not understate it on purpose or by mistake. Then, the fine rate may be lowered to 20% of the basic fine, which is 2%.

You have to clear the fine for not forwarding advance tax when SARS examines you, and you also have to discharge interest at the highlighted rate from the analysis date until the payment date.

For instance, if you owe R500 000 in standard tariff for the year and paid R400 000 in advance tax, the penalty for not clearing advance tax is 10 percent of R100 000, which is R10 000. If you show that you estimated your taxable income seriously, the fine may be lowered to 2% of R100 000, which is R2 000.

What is the penalty code in advance tax?

Penalty code in advance tax is a code that is used by SARS to identify the type and the reason for the penalty that is levied on the taxpayer for non-compliance with the advance tax requirements. The penalty code is indicated on the assessment notice issued by SARS to the taxpayer.

The penalty code in advance tax consists of two digits, which represent the following:

1. The first number denotes the kind of penalty, which can be either:

2. The second figure represents the purpose of the penalty, which can be either:

What is the penalty for late payments to SARS?

SARS doesn’t like it when you pay your tax debts late or too little. They will slap you with a fine that adds to your unpaid tax debt and interest.

The fine is a tenth of your unpaid tax debt unless you can show that you had a valid excuse for paying late and you sorted it out quickly. Then SARS may be nice and lower or cancel the fine.

You must cough up the fine and interest when SARS asks you to.

What is the penalty for self-assessment tax?

SARS will penalize you for self-assessment tax if you submit a wrong or late tax return. You fill out this return, not SARS, to declare your income and tax for the year.

The penalty is grounded on the difference between the tariff you forwarded and the tariff SARS determined. It is typically 20 percent of the difference, but it can be 5 percent if you prove that you didn’t cheat or respond carelessly.

You have to pay the penalty when SARS assesses your tax and tells you the amount. You must also clear interest on the fine from the assessment until the clearance date.

How do I check my SARS penalty?

You can check your SARS penalty by using one of the following ways:

How do I pay SARS penalties?

You can pay SARS penalties by using one of the following ways:

- ADVERTISEMENT -

Keep Reading

What Happens After Submitting Your Tax Return?

What Happens After Submitting Your Tax Return?

Today, we'll explore what happens to your tax return after you click ‘submit’,  and what you can expect to hear from SARS.

Reasons Why Tax Returns Get Rejected After Filing

Reasons Why Tax Returns Get Rejected After Filing

Today we will be looking at this situation in more detail, including why it happens and what you can do about it.

How To Receive The SARS Tax Number Via SMS

How To Receive The SARS Tax Number Via SMS

What is SARS Income Tax Verification?

What is SARS Income Tax Verification?

What is SARS Income Tax Verification? Let us give you more details on SARS tax verification and how to verify your SARS account. 

How to Avoid Paying Capital Gains Tax On An Inherited Property

How to Avoid Paying Capital Gains Tax On An Inherited Property

How to Avoid Paying Capital Gains Tax On an Inherited Property. We'll briefly touch on avoiding inheritance tax in South Africa.

Are SARS Penalties Tax Deductible?

Are SARS Penalties Tax Deductible?

This article delves into whether SARS penalties hold tax-deductible status, elucidates their functioning, and expounds on their consequences for taxpayers

How to Complete the Income Tax Return (ITR14) 

How to Complete the Income Tax Return (ITR14) 

To keep things neat, tidy, and as simple as possible, tax return for companies vs individuals. The company-focused income tax return uses code ITR14.

What Is the Securities Transfer Tax (STT) in South Africa?

What Is the Securities Transfer Tax (STT) in South Africa?

Today we will be exploring one of these- the Securities Transfer Tax, or STT. If you regularly interact with financial markets or investments, this is one you should properly understand.

How Tax Reduction Stimulates Economic Recovery

How Tax Reduction Stimulates Economic Recovery

IT12EI – Return of Income Tax Exempt Organisation

IT12EI – Return of Income Tax Exempt Organisation

This article explains the measures you can take to file your return of income for an organization(IT12EI ) that does not pay tax. 

How To File a Complaint with the Income Tax Department

How To File a Complaint with the Income Tax Department

But sometimes taxpayers are unhappy with how SARS treats them or their tax matters. In these cases, taxpayers can complain to SARS

Difference Between Tax Avoidance and Tax Evasion?

Difference Between Tax Avoidance and Tax Evasion?

Tax avoidance and tax evasion are often used interchangeably. Read on to learn the difference between tax evasion and tax avoidance.    

How To Become Tax Compliant in South Africa

How To Become Tax Compliant in South Africa

Today, we have a brief guide to tax compliance in South Africa to help you get your tax affairs in order.

How to Avoid Paying Dividend Tax in South Africa

How to Avoid Paying Dividend Tax in South Africa

In this guide, we'll delve into the art of sidestepping dividend taxes, probe into whether dividends enjoy a tax-free ride in South Africa

What is the Difference Between TAX and VAT?

What is the Difference Between TAX and VAT?

There are two main characters in the tax story that individuals and businesses meet quite often - income tax and VAT.