What is it?
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 is not a separate tax from income tax.
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
A ‘provisional taxpayer’ is:
i) A person (other than a company) who earns income which is not remuneration, an allowance or advance as contemplated in section 8(1) or who earns remuneration from an employer that is not registered for employees’ tax
ii) A company; or
iii) A person notified by the SARS Commissioner that he/she is a provisional taxpayer.
When must provisional tax be paid?
i) First period – 31 August:
This payment must be made within six months from the commencement of the year of assessment in question. This means that for the year of assessment that starts on the 1 March and end on the 28/29 February, the first period for which provisional tax becomes due will be the period ending 31 August.
ii) Second period – 28/29 February:
This payment must be made not later than the last day of the year of assessment in question. This means that for the year of assessment that starts on the 1 March and end on the 28/29 February, the second period for which Provisional Tax becomes due will be the period ending on the 28/29 February.
Example of payment dates
i) The following example refers to a 28 February 2023 year-end (2023 tax year):
– First provisional tax payment due on 31 Aug 2022
– Second provisional tax payment due on 28 Feb 2023
– Third or voluntary payment due on 30 Sept 2023
ii) The following example refers to a 31 May 2023 year-end (2023 tax year):
– First provisional tax payment due on 30 Nov 2022
– Second provisional tax payment due on 31 May 2023
– Third or voluntary payment due on 30 Nov 2023
Failure to Submit Provisional Tax (IRP6)
a) The Commissioner may estimate the taxable income and determine the amount payable, if the provisional taxpayer fails to submit an estimate for any particular period.
b) The estimate made by the Commissioner is effective for the relevant period within which the provisional taxpayer is required to make the payment for provisional tax.
Other failures to Submit Provisional Tax
a) Central Supplier Database (CSD) will change to non-compliant
b) You will be excluded to applying for tenders
Who is excluded on as a Provisional Taxpayer
i) Public Benefit Organisations (PBOs) approved by SARS
ii) Recreational clubs approved by SARS
iii) Any Body-Corporate, share block company or association of persons contemplated in section 10(1) (e)
iv) Any natural person who does not derive income from the carrying on of any business, if in that relevant year of assessment – – Taxable income does not exceed the tax threshold; or
– The taxable income from interest, dividends, foreign dividends, rental from letting fixed property and remuneration from an employer that is not registered for employees’ tax does not exceed R30 000
v) Non-resident owners or charterers of ships and aircraft who are required to make payments under section 33
vi) Any small business funding entity
vii) Deceased estates
I want to make submissions
https://veamsolutions.co.za/sars-returns-submit/
