As we begin the new income tax year, you’ll need to start thinking about preparing for provisional tax payments. Here’s a quick guide about what you need to know:
What is provisional tax?
Different from income tax, provisional tax is a way of paying your income tax liability in advance to ensure you don’t have a large tax debt on assessment. It allows your tax liability to be spread over an assessment year – with two payments in advance based on an estimated taxable income. On assessment, provisional payments will be offset against the liability for normal tax for the assessment year.
Are you a provisional taxpayer?
Anyone who receives an income that’s not remuneration is a provisional taxpayer. Most salary earners are not provisional taxpayers (if they don’t have other sources of income). Some income is exempt, but this needs to be confirmed by an accountant or SARS.
When should it be paid?
The first provisional tax payment must be made within six months of the start of the assessment year. For an assessment year starting in March, this will be 31 August. The second payment must be made by the last working day of the assessment year, in this case, the last business day of February. For information about a third voluntary payment, contact your accountant.
How should it be paid?
Register for SARS eFiling where you can request an IRP6 return and make your submission and payments online. You can register once for all types of tax using the client information system.
If you’re already an eFiler, simply add provisional tax to your profile so that you can access and file your IRP6 return online.
Top tip
Submitting your return and payment accurately and on time will ensure you have a smooth, hassle-free submission. Insufficient payment and/or an underestimated taxable income may mean you’ll be charged interest and penalties.
Need help with your tax?
Call us today to discover how to ensure you’re compliant with all your tax requirements.