In the first of our regular tax columns which we launched at the end of last year, we mentioned we would be focusing on provisional tax in the next column.
For those who are not sure what provisional tax is or who should pay it, let’s start off with a brief explanation:
What is provisional tax?
Provisional tax is not separate from income tax but is simply a means of paying your income tax liability during the year of assessment, instead of owing a large tax liability when you submit your income tax return during filing season. Provisional tax is therefore an advance payment of a taxpayer’s normal tax liability.
Who should pay provisional tax?
Provisional taxpayers are those who receive income other than remuneration. If you receive income such as rental income from a property, interest income from investments or other income from a trade, you will be a provisional taxpayer.
However, exceptions can apply (see website link below for list of exceptions).
Generally, the rule is if you only receive remuneration, then you are regarded as a non-provisional taxpayer.
However, a person who receives remuneration can be liable for provisional tax if the remuneration is received from an employer who is not registered as an employer with Sars (for example, South Africans working for foreign embassies in South Africa).
When and how should it be paid?
A provisional taxpayer is required to make two provisional tax payments: at the end of the first six months into the year of assessment (August) and on the last working day of the year of assessment (this year it would be February 26).
This is for taxpayers with the year of assessment ending February.
Taxpayers may make an additional provisional payment, generally known as the third or top-up payment, after the end of the year of assessment in order to reduce a liability for interest that would arise should their first two provisional payments be inadequate.
For taxpayers with the year of assessment ending February, the additional provisional tax payment must be made on or before September 30.
Please note: Provisional taxpayers must also submit an income tax return during annual filing season.
Provisional tax liability is calculated on estimated taxable income, including current taxable capital gains, for that particular year of assessment. These estimates of taxable income are submitted to Sars on an IRP6 return.
The normal tax payable on the estimated taxable income is calculated at the relevant rate of tax for that respective year of assessment.
Provisional tax returns are mandatory if you meet the definition of a provisional taxpayer. A provisional taxpayer must submit an IRP6 return, even if the end-result reflects no provisional tax payable.
An IRP6 return can be requested and submitted via the following channels:
• Sars eFiling at www.sarsefiling.co.za
• A Sars branch
• The Sars Contact Centre on 0800 00 7277
• For more on Provisional Tax, visit www.sars.gov.za > Types of Tax > Provisional Tax.
Regional news
• Scams: On another topic altogether, our region is aware of a number of scams targeting taxpayers. Please be very careful when asked to make payments or give away personal information to anyone claiming to be from Sars.
For more info on these scams, visit www.sars.gov.za > Targeting Tax Crime > Scams and Phishing.
•Sars services during January and February:
South Africa has entered the second wave of the pandemic and Sars is taking every step possible to protect taxpayers and its employees. Sars branches are closed for physical visits, but taxpayers can continue to make use of our digital offerings, including calling our contact centre on 0800 00 7277 or having virtual engagements with our agents.
You can make an appointment online at www.sars.gov.za (https://www.sars.gov.za/Contact/Pages/Make-an-Appointment.aspx).
You have the following options:
• A telephonic appointment where a Sars official will call you at an agreed time
• A video appointment where a video conference will be set up with a Sars official at an agreed time
Please keep checking our various media channels for updates on Sars branch closures.
Your safety and the safety of our staff is our key priority.
Problems with loading Sars forms due to Adobe flash player:
Sars apologises for the disruption in services brought about by the worldwide termination of support of the Adobe Flash platform on January 12.
If you are experiencing these issues, please visit the Sars website (www.sars.gov.za ) and click on the red section at the top of the home page for more info. Sars is working on resolving these issues as soon as possible.
