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Provisional Tax
What is provisional tax?
Companies automatically fall into the provisional tax system – a system that makes taxpayers provide for their final tax liability by paying at least two amounts in the course of the year of assessment. Final liability, however, is determined upon assessment.
The aim is to help taxpayers meet their liabilities in the form of two payments made from income received during the tax year, instead of in the form of a single, large sum after the end of the tax year. A third payment after the end of the tax year is optional.
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By when should you submit? NEW! Announcement of 14 October 2009!
Provisional taxpayers have now more time to submit their Income Tax returns, the deadline was extended from 20 November 2009 to 28 February 2010 BUT only if they meet the following three conditions:
- They must file using eFiling or e@syFile
- They must be compliant taxpayers (i.e. no outstanding returns)
- They must make payment within 7 days of the date of the assessment.
In terms of Provisional Tax, the status quo remains:
The first provisional tax payment had to be made six months after the beginning of the tax year i.e. 31 August 2009.
The second payment must be made not later than the last working day of the tax year i.e. 26 February 2010.
The third "topping-up" payment is voluntary and may be made within six months of the end of the tax year if your accounts close on a date other than the last day of February. If your tax year ends on the last day of February, the third payment must be made within seven months of the end of the tax year.
Failure to settle the total tax liability by then may result in interest being levied on any underpayment. In the case of an overpayment, interest is payable to the taxpayer.
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How does it work?
Your IRP6 provisional income tax return for the second period of the 2008/9 tax year was sent to you recently, to view the cover letter, please click here.If you haven't received you tax return, please log in / register on eFiling to access your return or download the forms here, go to "Which forms to use?"
More information on how Provisional Tax works can be found in the following documents:
How to calculate Provisional Tax?
The amount of tax payable is determined on the estimated taxable income. Please see Tax Tables 2010 (10 July 2010) or Statutory Rates and Rebates 2010 (10 July 2009) to assist you. There are three payments throughout the year:
- The First Period:
- Deadline was 31 August 2009;
- Half of the total tax for the full year;
- Less the employees tax deducted for this period (6 months);
- Less any allowable foreign tax credits for this period (6 months).
- The Second Period:
- Deadline is 26 February 2010;
- The total estimated tax for the full year;
- Less the employees tax paid for the full year;
- Less any allowable foreign tax credits for the full year;
- Less the amount paid for the first period.
- The Third Period:
- Deadline will be 30 September 2010;
- The total tax payable for the full year;
- Less the employees tax paid for the full year;
- Less any allowable foreign tax credits for the full year;
- Less the amount paid for the 1st and 2nd provisional tax periods.
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Which Forms to use?
You may submit the completed IRP6 form to your nearest SARS branch office, or via eFiling or via Post.
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Media Release
Click here for the Media Release as on 10 December 2008
Questions
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