A SARS penalty notice can feel like an ambush. The original tax liability has already been paid, the return was filed — and then months later an assessment arrives with a penalty that dwarfs the underlying tax. Understanding what triggered it, whether it can be remitted, and how to object formally is the difference between paying it and not paying it.
Types of SARS Penalties
Administrative Penalties
Administrative penalties under Section 210 of the Tax Administration Act apply for non-compliance — specifically for failing to file a return on time. SARS applies them monthly for each month a return remains outstanding.
The penalty amount is determined by your assessed income in the most recent year for which an assessment has been raised:
| Assessed Income | Monthly Penalty | |---|---| | R0 — R250,000 | R250 | | R250,001 — R500,000 | R500 | | R500,001 — R1 million | R1,000 | | R1 million — R5 million | R2,000 | | R5 million — R10 million | R4,000 | | R10 million — R50 million | R8,000 | | Above R50 million | R16,000 |
A single unfiled return running for 12 months at the R1,000 tier generates R12,000 in penalties before any interest. Multiple outstanding returns compound quickly — and each return type (income tax, VAT, PAYE) counts separately.
Understatement Penalties
Understatement penalties under Section 222 apply when a tax return understates the amount of tax owed. The percentage depends on how SARS characterises the behaviour:
- –**Bona fide inadvertent error:** 0% (SARS must be satisfied the error was genuinely inadvertent)
- –**Reasonable care not taken:** 25%
- –**No reasonable grounds for the tax position taken:** 50%
- –**Gross negligence:** 75%
- –**Intentional tax evasion:** 150% (200% for repeat offenders)
The penalty is applied to the understated amount — the difference between what was declared and what was owed — not to the total tax liability.
Late Payment Interest
Interest at the prescribed rate (currently linked to the repo rate, approximately 11.25% per annum) accrues daily on outstanding tax debt from the date payment was due. Unlike penalties, interest cannot be remitted — it is a statutory charge and runs until the debt is paid.
Requesting Remission of Administrative Penalties
Before engaging the formal dispute process, you can request remission of an administrative penalty via the Request for Remission (RFR) function on eFiling. SARS considers:
- –Whether this is a first instance of non-compliance for the specific penalty type
- –Whether extraordinary circumstances applied — hospitalisation, a natural disaster, the death of a sole director
- –Whether the taxpayer has a prior history of compliance
SARS routinely grants remission on the first occurrence for taxpayers with a clean prior record, provided the outstanding return is filed before or simultaneously with the RFR. Filing the return and submitting the RFR in the same session is the standard approach.
It is worth noting that an RFR is not an objection — it is an administrative request and does not pause the 30-business-day objection window. If remission is refused and you intend to dispute, the objection clock is still running from the date of the original assessment.
The Formal Objection Process
If SARS raises an assessment you believe is incorrect, you have the right to object under Section 104 of the Tax Administration Act. The steps are:
Step 1 — Notice of Objection (NOO)
A NOO must be filed within 30 business days of the date of the assessment. Extensions are available but must be applied for before the deadline passes — not after. File via eFiling under the relevant return type, under SARS Correspondence or Dispute Resolution.
The NOO must specify every ground of objection. SARS can reject an objection that raises grounds not stated in the NOO, so vague objections create later problems.
Step 2 — SARS Considers the Objection
SARS has 60 business days to issue a decision. They may allow the objection in full, partially allow it, or disallow it. If they disallow or partially disallow, the decision must state the grounds.
Step 3 — Notice of Appeal (NOA)
If the objection is disallowed in full or in part, you have 30 business days to file a NOA. Appeals proceed to either the Tax Board (for disputed amounts under R1 million) or the Tax Court.
Alternative Dispute Resolution (ADR)
Before going to the Tax Board or Tax Court, you can request ADR — a facilitated negotiation where SARS and the taxpayer attempt to reach agreement with the assistance of an independent facilitator. ADR is faster and considerably less costly than litigation. SARS accepts it for a wide range of disputes, and it resolves the majority of cases that reach it. It is almost always worth attempting before committing to court proceedings.
What This Means in Practice
The 30-business-day objection window is strict. Missing it effectively accepts the assessment as final, regardless of its merits. If you receive a SARS assessment that looks wrong, the immediate priority is to note the date and calculate the deadline.
For penalty disputes, having a tax practitioner review the assessment before filing the NOO matters. A poorly drafted objection — one that raises the wrong grounds, or that does not address the specific legislative basis SARS used — wastes the 30-day window and gives SARS a procedural basis to disallow without engaging the substance.
Sikatrix Business Accountants handles SARS disputes from initial assessment review through to ADR and, where necessary, Tax Board representation.
References & Further Reading
- –[SARS: Tax Administration Act](https://www.sars.gov.za/legal-counsel/legislation/acts/tax-administration-act/) — Sections 104–133 cover the objection, appeal, and ADR process in full
- –[SARS: Administrative Penalties](https://www.sars.gov.za/businesses-and-employers/outstanding-penalties/) — How administrative penalties are calculated and when remission is available
- –[SARS: Dispute Resolution](https://www.sars.gov.za/disputes/) — Official SARS dispute resolution guide
*This article is for general information only and does not constitute legal or tax advice. Dispute deadlines are strict and unforgiving — contact a [registered tax practitioner](/contact) as soon as you receive an assessment you intend to dispute.*
