Provisional tax payments must be made by natural persons registered for provisional tax (including other registered tax payers with a February or August financial year-end) on or before 31 August each year. This means that a provisional taxpayer must, during every period, submit an estimate of their total taxable income which will be made in that year of assessment. If the taxpayer also earns a salary, the PAYE deducted during the year of assessment will be considered when calculating the estimated amount.
The South African Revenue Service (“SARS”) also allows for an additional provisional payment, which must be paid on or before 29 September each year. Furthermore, provisional taxpayers are entitled to a foreign tax credit regarding foreign taxes paid on income from a non-South African source.
It is important for taxpayers to ensure that they meet the necessary deadlines to avoid interest and penalties. Here are some of the consequences of late or the underpayment of provisional tax:
Late payment of provisional tax
Underpayment of provisional tax
CGT: It is also necessary for a provisional taxpayer to include in their estimated taxable income capital gains that arose or will arise during the year of assessment.
All provisional taxpayers are urged to submit their tax returns correctly and on time. Should you need assistance when submitting your provisional tax returns, please feel free to contact us.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)