Administrative Penalties for Late Submission of Tax Returns.
With effect from 1 December 2022*, administrative penalties relating to the late submission of a tax return will be charged when one or more tax return(s) relating to tax years from 2007 up to 2020 are outstanding. Prior to this change, taxpayers were only liable for administrative penalties for late submission if they had two or more tax returns outstanding for these tax years.
Incidences of non-compliance subject to a fixed amount penalty:
Individuals (Personal Income Tax) –
From 1 December 2022 if a natural person failed to submit an income tax return for years of assessment from 2007 onwards when that person has one or more income tax returns outstanding.
Companies (Corporate Income Tax) –
Penalties will be imposed where the company has failed to submit an income tax return as and when required under the Income Tax Act for years of assessment ending during the 2009 and subsequent calendar years, where SARS has issued that company with a final demand referring to the public notice and requiring the submission of the outstanding income tax return, and the company failed to submit the return within 21 business days of the date of issue of the final demand.
Regardless of whether you agree or disagree with the admin penalty it is advisable to submit the outstanding return to stop further admin penalties. The penalty will reoccur for every month the return(s) remains outstanding for a maximum of 35 months.
The administrative non-compliance penalty for the failure to submit a return comprises fixed amount penalties based on a taxpayer’s taxable income and can range from R250 up to R16 000 a month for each month that the non-compliance continues.
Should you require professional advice in this regard please do not hesitate to contact our offices.
Applying 80/20 Analysis to Your Business.
In 1897, Vilfredo Pareto, and Italian economist, observed that the distribution of wealth was unequal within every country. That is, 5% of the population might own 50% of the wealth, 10% of the population might have 65% and 20% might own 80%. Whilst this is not very remarkable (we see it all the time) what Pareto discovered was that this pattern repeated itself in almost every country he examined. Consequently, he concluded that there was a predictable mathematical relationship at work that determined the distribution of wealth: in short, 20% of the population would hold 80% of the wealth.
Since Pareto, many other academics have observed this phenomenon in other aspects of life. They have found generally that 80% of the results of something usually come from 20% of the efforts. To clarify, it is neither the first 20% nor the last 20% of efforts that produces the 80% of results, but rather it is distributed amongst all the effort. If we could easily identify the 20% that produces the results, we would probably try to concentrate on it and eliminate the inefficient 80%. The dilemma, of course, is that we can’t quite put our finger on those high-valued activities that create the biggest pay-off.
Think about some of ways you can observe the Pareto principle in your own life. For example:
- 20% of your investment portfolio returns about 80% of the capital gains while the other 80% of your investments make up only 20% of your gains (if you could just predict those producers you could have retired by now)
- 20% of your effort at work results in 80% of your achievement while the other 80% makes up only 20% of your achievement (knowing which effort will be rewarded would let you go home early)
- 20% of your sales leads return 80% of your future revenue while the other 80% lead to only 20% of revenue (concentrating on those 20% would save you dramatically, if you knew who they were)
- 20% of your employees’ effort results in 80% of the output while 80% of their effort only produces 20% of the output (if you don’t believe this, just watch them for a few days)
- 20% of your employees produce 80% of the value-added work while 80% of your employees produce only 20% of the value-added work (we call these people “stars,”, and they do not usually stick around when they realize that their pay is not commensurate)
- 20% of your employees will create 80% of the unnecessary work while 80% will create only 20% of the unnecessary work (just go to a big corporation and look to see how many committee meetings there are)
- 20% of your customers make up 80% of your complaints while the other 80% only make up 20% of the complaints (is there something in common with these people and can you do something quick to resolve the matter?)
- 20% of your time on the phone is spent with 80% of your clients while the other 80% is only spent with 20% of you customers (are these the right 20% you want to spend time with?)
- 20% of “value” comes from 80% of your customers while the other 80% of the value comes from only 20% of your customers
Enactment of Key Anti-Money Laundering and Combating of Terror Financing Laws.
Two key Acts of Parliament, designed to strengthen South Africa’s system of Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT), have been signed into law. These laws will strengthen the fight against corruption, fraud and terrorism, and also assist South Africa in meeting the international standards on AML/CFT, and to reduce the prospect of greylisting by the Financial Action Task Force (FATF).
South Africa underwent a mutual evaluation (peer review) of its AML/CFT system by the FATF between April 2019 and June 2021, with the final report being finalised and published in October 2021(Mutual evaluation report. Since then, the South African government and its authorities have been working resolutely to address the deficiencies that were identified in the Mutual Evaluation Report. Part of the remedial efforts included the amending of six laws that are key to the effectiveness of South Africa’s AML/CFT measures.
President Cyril Ramaphosa has recently signed into law two key Acts of Parliament, namely the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act, 2022 (“General Laws Amendment Act”) and the Protection of Constitutional Democracy Against Terrorism and Related Activities Amendment Act, 2022 (“POCDATARA Amendment Act”). This is a significant step towards addressing the deficiencies in South Africa’s AML/CFT measures that were identified in the 2021 Mutual Evaluation Report.
We will keep you posted on developments in this regard.
Operation Vulindlela
Sincerely,
