Provisional tax – in a nutshell
It’s February and for all individuals and trusts, or companies with a February year-end date, it’s soon time to file their second provisional tax returns. The deadline for submission and payment is 26 February 2021.
Who should file provisional tax?
Companies and trusts must file provisional tax returns.
Individuals who earn income other than remuneration (a fixed salary/pension on which tax is already deducted).
Public charities or recreation clubs do not have to file provisional tax returns.
How is the second provisional tax payment calculated?
The calculation is based on the taxable income issued according to the latest tax assessment.
The estimated tax for the full year, minus the employee tax paid for the full year, minus the first provisional tax payment is now payable.
Some important aspects to consider.
- SARS does not automatically take medical credits into account. So remember to update it when submitting your return.
- Beware of fines and interest.
Taxable capital gains for the relevant year must be included in the estimated taxable income. Therefore, if you sold a property or shares during the year and generated a capital gain, you must bring this to the attention of your accountant.
- Do not forget about the impact of COVID-19.
If COVID-19 negatively affected your business during the period March 2020 to February 2021, it may be that the most recently issued SARS assessment, which is still based on the previous year, is not an accurate estimate of the current year. This could lead to too much provisional tax being paid to SARS. If you are of the opinion that your taxable income for the year will be lower than in the past, contact your accountant so that an amended calculation can be prepared. This calculation must be accurate to prevent SARS from charging fines later if too little provisional tax has been paid.
Please contact your nearest BVSA branch for more information and assistance with handling your second provisional tax return. Remember, by working with your bookkeeper and submitting an accurate estimate on time and making payment if necessary, you ensure a worry-free, smooth process where fines and interest are eliminated.
Author: Anene de Beer: anened@bvsa.ltd
