Sars narrows ‘honest mistake’ defence: what tax penalty changes mean for taxpayers

South Africa’s 2026 amendment to the understatement penalty regime has significantly limited taxpayers’ ability to rely on the “bona fide inadvertent error” or “honest mistake” defence. The change shifts the focus from taxpayer intent to taxpayer behaviour, requiring stronger evidence of reasonable care, proper governance and contemporaneous documentation. Tax experts warn that companies, trusts and individuals must now take a more disciplined approach to tax compliance to avoid costly SARS penalties.

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