A review of the understatement penalty provisions of the Tax Administration Act 28 of 2011
Date
2016
Authors
Morris, Wayne Reid
Journal Title
Journal ISSN
Volume Title
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Abstract
The research reviews the legislation pertaining to the understatement penalty provisions of the Tax Administration Act 28 of 2011. The problems associated with the levying of understatement penalties in the previous legislation are determined. A detailed evaluation is made of the understatement penalty provisions, with an emphasis on the determinants for the ‘behaviour’ and ‘case’ types, and the penalty percentages derived therefrom. The fiscus’s stated goals and intentions in respect of the understatement penalties are identified and reviewed to determine if they are aligned with those considered to be international best practice. The requirements of the Constitution of the Republic of South Africa of 1996 are reviewed with respect to the understatement penalties. A comparative analysis of South Africa’s understatement penalties and those of tax authorities identified as having similar tax administration regimes is presented. The research suggests that while a more systematic and uniform approach, to understatement penalties, has been established under the new legislation, the subjective nature of the ‘behaviour’ and ‘case’ determinants applied is likely to result in disputes between the South African Revenue Service (SARS) and the taxpayer. The research indicates that while the categories and nature of understatement penalties levied are broadly aligned with those of comparable countries’ regimes, the penalty percentages applied in South Africa, are relatively high.
Key words and terms: understatement penalties, international best practice, goals, uniform, systematic, ‘behaviour’, ‘case’, subjective, similar tax administration regimes, penalty percentages.
Description
A research report submitted to the Faculty of Commerce, Law and
Management in partial fulfilment of the requirements for the degree of
Master of Commerce (specialising in Taxation).
Johannesburg, 25 March 2015
Keywords
Citation
Morris, Wayne Reid (2016) A review of the understatement penalty provisions of the Tax Administration Act 28 of 2011, University of the Witwatersrand, <http://wiredspace.wits.ac.za/handle/10539/21491|>