If you receive this type of income or should that income accrue to you , you will always be a provisional taxpayer. Companies automatically fall into the provisional tax system. The Commissioner may also notify any person that they are a provisional taxpayer. The amount of tax payable is determined on the estimated taxable income for that particular year of assessment, as follows:. SARS has introduced changes to provisional tax which affect the way in which provisional taxpayers file their IRP6 returns.
Businesses and Employers. Tax Practitioners. Customs and Excise. Provisional Tax. What is it? Provisional tax is not a separate tax from income tax. It is a method of paying the income tax liability in advance, to ensure that the taxpayer does not have a large tax debt on assessment.
Provisional tax allows the tax liability to be spread over the relevant year of assessment. It requires the taxpayers to pay at least two amounts in advance, during the year of assessment, which are based on estimated taxable income. A third payment is optional after the end of the tax year, but before the issuing of the assessment by SARS. On assessment the provisional payments will be off-set against the liability for normal tax for the applicable year of assessment.
Who is a Provisional Taxpayer? Any person who receives income or to whom income accrues other than remuneration, is a provisional taxpayer. For example, if filing for period 01 in August of , you will select the tax year. Alternatively, click here to get step-by-step help from TaxTim! Particulars of Taxpayer - will already be completed. Check to ensure that these are still correct.
Period - ensure that the correct period is checked - for example, first period for the tax year is due 31 August and the second period is due 28 February Turnover - Total gross income received before exemptions and deductions.
Estimated taxable income - all your income minus the business-related expenses incurred in earning that income. Also subtract any pension fund, retirement annuity fund contributions, donation deductions and any exempt income. Tax on estimated taxable income - this amount will automatically calculate.
Less: Primary, secondary and tertiary rebates for individuals only - depending on your age, this amount will already appear on the return. Less: Medical scheme fees for individuals only - this is a credit that goes toward providing relief if you or your employer pay for a private medical scheme.
For the tax year this amounts to R per month for the first two members each and R per month for every member after that. For the tax year this amount was also R per month for the first two members each and R per month for every member thereafter. See our medical aid credits calculator. Less: Additional medical expenses for individuals only - if your medical aid costs exceed 4x the above medical credit 3x if you are over 65 then a portion of your costs PLUS Out of Pocket Medical expenses can be claimed here as a credit.
Please refer to our Medical Expense Tax Guide for more information. Tax for the full year - will automatically calculate based on the tax tables. Tax for this period - this amount will automatically calculate and will be divided in two for the first period. Less: Employees tax for this period - add up all the employee tax you paid from all your pay slips. Less: Foreign tax credits for this period - if you earned money from overseas and any tax was withheld or paid, include that amount here.
Less: Provisional tax paid for 1 st period - You will need to enter the amount that you have paid for the first provisional tax return. Only applicable for the second provisional tax return. Tax payable for this period - this amount will automatically calculate. Add: Penalty outstanding from 1 st period - You will need to enter the penalty amount if a penalty was raised on your first provisional tax return, only applicable to the second provisional tax return.
Add: Interest outstanding from 1 st period - You will need to enter the interest amount if interest was raised on your first provisional tax return, only applicable to the second provisional tax return.
Add: Penalty on late payment - this amount will automatically calculate. Add: Interest on late payment - this amount will automatically calculate.
For example, capital gains and lump sums. Historical information - this will already be completed, based on your previous year's income. Payment detail - provides you with the payment reference number and beneficiary ID.
One payment must be made by end of August mid tax year. SARS wants provisional taxpayers to have an even cash flow and avoid paying one large potentially crippling chunk of tax in February, so they ask that two or optionally three payments are made during the tax year at the end of August and end of February , with an IRP6 required for each one.
The tax paid from the first and second payments is then taken off any tax owing at the end of tax season , and can be refunded by SARS if too much was paid. Provisional taxpayers — those who earn income from sources other than, or in addition to a regular salary or traditional payment from an employer — are all too familiar with the process of estimating their taxable income and submitting provisional tax returns.
Let's take a look at the most common penalties provisional taxpayers face, plus how to avoid them. SARS is exceptionally quick to apply these fines - even if you're only a few days late - so be sure to mark these deadlines down in your calendar or sign up to receive our email reminders , so that you never miss these dates of end August and end February.
A unique part of paying provisional tax is the need to estimate your annual taxable income. To prevent people from pulling these figures out of the air, or reporting lower numbers, SARS imposes hefty fines if you underestimate. This penalty could be levied if your actual taxable income calculated in your final tax return ITR12 is more than the estimated income submitted on your second provisional return IRP6. The penalty amount is different for taxpayers whose taxable income is more than R1 million compared to those earning less than R1 million.
Your 'basic' amount is your taxable income on your most recent assessment.
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