5 Common SARS Penalties in South Africa and How to Avoid Them

One late return can cost you more than you think. SARS penalties accumulate quickly, and many business owners only find out about them when a blocking message appears on eFiling - or when they need a tax clearance certificate for a tender or a loan.

This guide covers the most common SARS penalties in South Africa, how much they can cost you, and exactly what to do to avoid them. If your business is already behind, we'll show you how to fix it - a quick consultation with a tax practitioner is often all it takes to get sorted.

1. Penalty for Late Submission of Returns (the R250 + "flood-and-damage" mechanic)

SARS penalties for late returns go through two phases:

• Phase 1 (fixed): a fixed administrative penalty of up to R250 per month (capped at R2,000 per month depending on the registration) for every month the return is outstanding.
• Phase 2 (additional): after a period of non-compliance, SARS can add an additional 10% of the tax payable (and for repeated offences, 200% of the fixed penalty).

The fixed penalty rises with your taxable income bracket - under R250,000 it's R250/month; over R50 million it jumps to R2,000/month. The clean fix is simple: never let a return go past its due date silently.

2. Underestimation Penalty (Provisional Tax)

If you're a provisional taxpayer and your provisional payments fall more than 20% below your eventual tax liability for the year, SARS will impose an underestimation penalty on the shortfall. This is separate from interest.

The two provisional periods fall roughly at end of August and end of February, with an optional third before the end of September. Getting your estimates wrong in either direction costs money - which is exactly why many SMEs pay a bookkeeper to run the numbers before submitting.

3. Non-Submission Penalty (ITR12 / ITR14)

For individuals, SARS can issue an estimated assessment based on whatever information it has if you fail to submit an ITR12. That estimate is almost always higher than your real liability, and it's the fastest way to get a false tax debt that blocks clearances.

Companies that don't submit ITR14 risk the same estimated assessment plus the fixed late penalty. This is one of the most common reasons a "deregistered" or "blocked" status appears on a company's profile.

4. Penalties on Underpaid Provisional Taxes (Interest)

Beyond penalties, SARS charges interest on any amount not paid by the due date, compounded daily. Interest is not a fine - it's the price of borrowing SARS's money. With interest rates where they are, an unpaid tax bill grows noticeably every month.

5. Unauthorised Deductions and "Back From Bank" Penalties

Employers who deduct PAYE/UIF/SDL but fail to pay it over properly can face severe consequences, including criminal provisions in extreme cases. Every payroll must be reconciled (EMP201 monthly, EMP501 twice a year). Employers who make late deductions or don't register for UIF/SDL leave a trail of penalties.

How to Check Whether You Owe SARS Penalties

Log into SARS eFiling and check your Statement of Account (SOA). Look for "A67" (late submission penalty codes), "A67-P" or interest entries. If you see them, ask a practitioner to complete the required outstanding returns and apply for the penalty to be reconsidered or remitted - SARS is often reasonable about waiving penalties once the compliance is back on track.

Frequently Asked Questions