Are You A Provisional Taxpayer?

What is it?

Provisional tax is not a separate tax. It is a method of paying tax due that ensures that the taxpayer does not pay large amounts on assessment, as the tax liability is spread over the relevant year of assessment. It requires the taxpayers to pay at least two amounts in advance during the year of assessment, which are based on estimated taxable income.

Who is a provisional taxpayer?

Any person who receives income (or to whom income accrues) other than a salary, is a provisional taxpayer. A provisional taxpayer is defined in paragraph 1 of the Fourth Schedule of the Income Tax Act, No.58 of 1962, as:

  • Any unincorporated person who derives income by way of remuneration –
    • Remuneration from an employer that is not registered in terms of para 15
    • Any amount that does not constitute remuneration or an allowance or advance contemplated in s8(1)
  • Any Company/CC/Trust
  • Any person who is told by the Commissioner that he or she is a provisional taxpayer.

Excluding

  • An individual who derives no income from carrying on a business if –
    • Their taxable income will not exceed the tax threshold (R75 750 for under 65’s in 2017/18) or
    • Their taxable income for the year of assessment that is derived from interest, dividends, foreign dividends, rental from the letting of fixed property, and any remuneration from an unregistered employer does not exceed R30 000.
  • PBO’S, recreational clubs, body corporates, share block companies or associations of persons contemplated in s 10(1)(e), non-resident ship-owners, small business funding entities
  • Deceased estates.

When should it be paid?

  • The first provisional tax payment must be made six months after of the start of your approved financial year.
  • The second payment must be made no later than the last working day of your approved financial year.
    • If the provisional taxpayer does not submit a provisional tax return within four months after the last day of the year of assessment, then the provisional taxpayer shall be deemed to have submitted an estimate of an amount of nil taxable income.

 

 

 

 

If you need any further information regarding your status or obligations as a provisional taxpayer, contact Audax Accounting Solutions for assistance at info@audax.co.za.