Today’s Topic is Provisional Tax
I will explain what it is how it works and when its due
Provisional tax is broken down into 2 returns (there is a 3rd option that is also available).
What SARS asks is that we guesstimate what our taxable income will be by the time year-end comes, then what we do is split this up into 2 periods (August being the first) and (February being the second)
It is very important to note that provisional tax is not a separate tax from your income tax, it’s simply a provision for your income tax 😊 it also helps taxpayers settle their tax liability over time and not have to come up with funds all at once.
If you have overstated on your provisional tax eg: I had to pay in R 10 000 of tax but when I lodged my tax return I was only due to pay R5000 SARS will refund you the difference. I always believe its better to overestimate than underestimate or you will face penalties.
So, who needs to pay provisional tax?
- Any person who receives income other than remuneration or allowance from an Employer who is not registered for Employees Tax
- Any Company
- A person who has been notified by SARS that they must become a provisional taxpayer.
Your first period is August, so this will be referred to as the 201901 IRP6 Return and your second is in February and this is referred to as the 201902 IRP6 Return. The first return is due by the end of August and the February one is due by the end of February 😊