© Warona Lekoko, 2024
▪ Provisional tax (PT) works much like employees’ tax – it’s NOT a separate or additional tax, but rather advances/pre-payments of normal tax
▪ PT is paid twice a year, whereas PAYE are monthly payments
▪ The main reason for these taxes is force TPs to pay their tax liabilities. Nobody wants to pay tax and to avoid a TP from spending all their money by year-end,
these regulations force the TP to make “instalments” of their tax liability throughout the year to a prevent non-payment on assessment date
▪ A TP can be liable for both PT and PAYE, but companies automatically provisional TP
▪ Whereas PAYE is based on remuneration, PT is based on estimates of taxable income of which cannot be lesser than basic. These estimates must be
submitted to SARS on an IRP6 returns, even if the amount of the provisional payment is Rnil
▪ No longer registration/ deregistration process to be provisional taxpayer as the onus on TP to determine if they’re liable for PT and to request & submit return
▪ Late/incorrect payments & failure to submit estimates could result in additional tax & penalties & interest
▪ The first and second provisional payments are compulsory, but a voluntary third additional payment may be made to avoid underpayment & risk of interest
▪ The PT payments, + any PAYE withheld during the year, will be offset against the liability for normal tax at the end of the YOA
EXCLUDES:
Natural person who doesn’t derive income from carrying of business, if in
the YOA –
INCLUDES: Taxable income doesn’t exceed tax threshold, or
Person (other than company) that receives income which is not Taxable income from interest, dividends, foreign dividends, rental
remuneration/ allowance or advance i.t.o. s8(1) OR earns remuneration from letting fixed property & remuneration from ER that is not
from an employer that is not registered for PAYE registered for PAYE doesn’t exceed R30 000
A company Deceased estate
Person notified by Commissioner that they’re a provisional taxpayer After
exemptions
30 Sep 24 Nov
31 Aug 28 Feb
2024 2025
–
All provisional TPs must make at least 2 PMT during YOA:
▪ 1st payment [compulsory] – within 6 months from start of YOA
▪ 2nd payment [compulsory] – on or by last day of YOA
▪ 3rd payment [top-up] if the year-end (par 23A) =
28/29 February – 7 months after end of year of assessment → 30 September
Other – 6 months after end of YOA
Purpose: enable TPs to pay difference between PAYE & PT already paid during the year and the total tax liability
- the 1st payment & return is not required if the duration of the YOA doesn’t exceed a period of 6 months (i.e. death, ceased to be tax resident,
company being incorporation during the year & financial year-end change)
- Taxable portion of the aggregate capital gain for current year of assessment must be included in both the first and second provisional tax calculations
- Provisional TP can make 3rd voluntary provisional tax payment to avoid (or reduce) paying interest i.r.o its tax liability for a particular YOA
- If last day of period in which PMT must be made = Sat, Sun or public holiday, then last business day before that day
–
q TPs must estimate their taxable income for the YOA & submit it – failure to submit estimate will result in fine or /imprisonment (not exceeding 2 yrs) (par 30(1)(1A)(c))
q If PTP, that’s a natural person, dies during YOA, no estimate will be required to be made for the period ending on date of death
Basic amount: person’s taxable income as assessed for latest preceding YOA, excluding (par 19(1)(d)):
OTHER THAN COMPANY: COMPANY:
Taxable capital gain Taxable capital gain
RLB, RLWB or SB
Amount i.t.o. par (d) of GInc def
• Though taxable capital gain is excluded when calculating basic amount, estimated taxable capital gain is included when calculating estimate of taxable income
• If TP uses estimate that is below basic, SARS will inquire them and TP must furnish them with reasons and circumstances why
▪ Provisional tax (PT) works much like employees’ tax – it’s NOT a separate or additional tax, but rather advances/pre-payments of normal tax
▪ PT is paid twice a year, whereas PAYE are monthly payments
▪ The main reason for these taxes is force TPs to pay their tax liabilities. Nobody wants to pay tax and to avoid a TP from spending all their money by year-end,
these regulations force the TP to make “instalments” of their tax liability throughout the year to a prevent non-payment on assessment date
▪ A TP can be liable for both PT and PAYE, but companies automatically provisional TP
▪ Whereas PAYE is based on remuneration, PT is based on estimates of taxable income of which cannot be lesser than basic. These estimates must be
submitted to SARS on an IRP6 returns, even if the amount of the provisional payment is Rnil
▪ No longer registration/ deregistration process to be provisional taxpayer as the onus on TP to determine if they’re liable for PT and to request & submit return
▪ Late/incorrect payments & failure to submit estimates could result in additional tax & penalties & interest
▪ The first and second provisional payments are compulsory, but a voluntary third additional payment may be made to avoid underpayment & risk of interest
▪ The PT payments, + any PAYE withheld during the year, will be offset against the liability for normal tax at the end of the YOA
EXCLUDES:
Natural person who doesn’t derive income from carrying of business, if in
the YOA –
INCLUDES: Taxable income doesn’t exceed tax threshold, or
Person (other than company) that receives income which is not Taxable income from interest, dividends, foreign dividends, rental
remuneration/ allowance or advance i.t.o. s8(1) OR earns remuneration from letting fixed property & remuneration from ER that is not
from an employer that is not registered for PAYE registered for PAYE doesn’t exceed R30 000
A company Deceased estate
Person notified by Commissioner that they’re a provisional taxpayer After
exemptions
30 Sep 24 Nov
31 Aug 28 Feb
2024 2025
–
All provisional TPs must make at least 2 PMT during YOA:
▪ 1st payment [compulsory] – within 6 months from start of YOA
▪ 2nd payment [compulsory] – on or by last day of YOA
▪ 3rd payment [top-up] if the year-end (par 23A) =
28/29 February – 7 months after end of year of assessment → 30 September
Other – 6 months after end of YOA
Purpose: enable TPs to pay difference between PAYE & PT already paid during the year and the total tax liability
- the 1st payment & return is not required if the duration of the YOA doesn’t exceed a period of 6 months (i.e. death, ceased to be tax resident,
company being incorporation during the year & financial year-end change)
- Taxable portion of the aggregate capital gain for current year of assessment must be included in both the first and second provisional tax calculations
- Provisional TP can make 3rd voluntary provisional tax payment to avoid (or reduce) paying interest i.r.o its tax liability for a particular YOA
- If last day of period in which PMT must be made = Sat, Sun or public holiday, then last business day before that day
–
q TPs must estimate their taxable income for the YOA & submit it – failure to submit estimate will result in fine or /imprisonment (not exceeding 2 yrs) (par 30(1)(1A)(c))
q If PTP, that’s a natural person, dies during YOA, no estimate will be required to be made for the period ending on date of death
Basic amount: person’s taxable income as assessed for latest preceding YOA, excluding (par 19(1)(d)):
OTHER THAN COMPANY: COMPANY:
Taxable capital gain Taxable capital gain
RLB, RLWB or SB
Amount i.t.o. par (d) of GInc def
• Though taxable capital gain is excluded when calculating basic amount, estimated taxable capital gain is included when calculating estimate of taxable income
• If TP uses estimate that is below basic, SARS will inquire them and TP must furnish them with reasons and circumstances why
