Provisional tax is a method used by SARS to ensure tax collection throughout the year.
The following persons / entities are obliged to complete and submit provisional tax returns :
- All businesses
- All Trusts
- All Directors of Companies
- All members of CC’S
- Individuals who earn rental income and receive interest of more than the exempt portion.
- All sole proprietors.
Provisional tax forms have to be submitted twice a year during August and February for individuals and Companies / Trusts with a February year-end.
Completing your provisional tax returns accurately during the year means that you should not have any tax liability at the end of the year since you have already paid your taxes for the year.
If however you either did not complete a provisional tax return, or understated your tax liability during the year, SARS will impose a penalty of 10% and charge interest on the understated amount.
It is thus essential that you consider whether you have to register as a provisional tax payer in order to ensure that your returns are completed accurately. By doing this you can avoid paying unnecessary penalties and interest to SARS.
SOURCES :
Cronje & Cronje
Business Partners
