Provisional Tax Explained
Who qualifies as a provisional taxpayer?
- Receive interest of less than R23 800 and are under 65.
- Receive interest of less than R34 500 and are 65 or older.
- Receive an exempt amount from a tax-free savings account.
Fulfilling provisional tax payments
- The first provisional tax payment is compulsory and should be made within the first six months of the assessment year. If this date falls on a Saturday, Sunday or public holiday, the payment should be made on the last business day before that date.
- The second provisional tax payment is compulsory and should be made before the last working day of the year of assessment.
- The third provisional tax payment is voluntary. Companies with a year-end in February should complete this payment before the last business day of September. In other instances, it should be completed within six months of the year of assessment.
Penalties for non-compliance
Meeting the deadlines outlined for provisional tax payments is crucial in avoiding hefty penalties. Late payments can result in penalties of up to 10% applied to your total taxable amount and can be issued on either payment period. SARS is often quick to implement its fines and can allocate interest at its prescribed rate.
Underestimating Taxable Income
SARS regularly outlines the importance of meeting payment deadlines and maintaining absolute accuracy when submitting provisional tax returns. Due to the hefty fines associated with non-compliance, it may be in your best interests to seek professional assistance to meet your tax return obligations. MMS Group offers professional tax services to ensure this process is completed accurately and timeously. Please reach out to our experts for more information.