Updated: Feb 24
22 February 2021
PROVISIONAL TAX – SECOND PERIOD
Provisional tax is a mechanism for the advanced collection of normal tax from taxpayers. All companies are subject to provisional tax. Because employees’ tax is also an advanced collection of normal tax, only individuals who have income other than remuneration are subject to provisional tax. This would include independent contractors, sole traders and investors. Note that provisional tax is not a separate tax, but a method of tax collection.
A provisional taxpayer includes:
· Any person who derives income which is not remuneration or an allowance or advance
· Any company or close corporation
· Any person notified by the Commissioner that he is a provisional taxpayer
COVID-19 PROVISIONAL TAX RELIEF
The Covid-19 tax relief for provisional tax is available from 1 April 2020 to 30 September 2020 for the first provisional tax period and from 1 April 2020 to 31 March 2021 for the second provisional tax period.
The following measures are aimed at assisting small to medium-sized businesses (individuals, companies, and trusts) to alleviate cash flow problems for compliant provisional taxpayers:
· Deferral of a portion of the payment of the first and second provisional tax liability to SARS, without SARS imposing penalties and interest for the late payment of the deferred amount
· The first provisional tax payment due from 1 April 2020to 30 September 2020 will be based on 15% of the estimated total tax liability, while the second provisional tax payments due from 1 April 2020 to 31 March 2021, will be based on 65% of the estimated total tax liability (after deducting the 15% payment amount received from the 1st period into account).
· Provisional taxpayers with deferred payments will be required to pay the remaining 35% tax liability when making the third provisional tax payment, in order to avoid interest charges on assessment.
TERMS AND CONDITIONS FOR THE SUBMISSION OF PROVISIONAL TAX RETURNS:
Please be advised that SARS has become stricter with regards to the submission of accurate estimates of taxable income in the second provisional tax return. Penalties will be imposed on taxpayers should the following requirements not be met:
Provisional taxpayers with a taxable income of up to R1 million
· Where the estimate is less than 90% of the actual taxable income and also less than the basic amount, a penalty of 20% is levied of the difference between
The lessor –
->The amount of normal tax calculated in respect of a taxable income equal to 90% of such actual taxable income
->The amount of normal tax calculated in respect of a taxable equal to such basic amount
Provisional taxpayers with a taxable income above R1 million
·->The estimated taxable income must be equal to 80% of the actual taxable income for the year