Avoid Interest and Penalties, submit your Provisional Tax Return

MANAGEMENT’S RESPONSIBILITY
November 26, 2018
HELPFUL TAX RESOURCES
January 23, 2019

The February financial year-end is in sight and natural persons registered for provisional tax and all companies whose year-end falls in February 2019, must pay the Second Provisional Tax by no later than 28th of February 2019.

This means that a provisional taxpayer must submit an estimate of their total taxable income which will be made in the 2019 year of assessment.

It is important for taxpayers to ensure that they meet the necessary deadlines to avoid interest and penalties. Here are some of the consequences of late or the underpayment of provisional tax:

Late payment of provisional tax

  • Interest at the prescribed rate on late payment;
  • A penalty of 10% will be levied on any late payment regarding the first and second periods, and/or;
  • SARS will consider the estimated income to be nil if four months have elapsed since the due date of the second provisional tax payment.

Underpayment of provisional tax

  • A penalty up to a maximum of 20% of the underpayment may be levied by SARS;
  • If the taxable income is more than R1 million, a penalty will be levied if the second-period estimate is less than 80% of the actual taxable income;
  • If the actual taxable income is equal or less than R1 million, a penalty will be levied if the second-period estimate is below the basic amount and not within 90% of the actual taxable income for the year.

CGT: It is also necessary for a provisional taxpayer to include in their estimated taxable income capital gains that arose or will arise during the year of assessment.

Conclusion

All provisional taxpayers are urged to submit their tax returns correctly and on time. Should you need assistance when submitting your provisional tax returns, please feel free to contact us.

 

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)