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Who must register as provisional tax payers –

All companies and CCs

All individuals over 65 who

1) are carrying on a business and whose taxable income exceeds the threshold or

2) whose income from interest, foreign dividends and retail exceeds R120 000

All individuals under 65 who

1) are carrying on a business and whose taxable income exceeds the threshold or

2) whose income from interest, foreign dividends and retail exceeds R20 000

1st Provisional Tax Payment (due 6 months into the tax year to which it applies)

SARS determines the “basic amount” from your last assessed taxable income. You pay 1/2 of the tax on the basic amount. If you expect your taxable income for the current year to be significantly less than the basic amount, you can ask SARS to accept your estimate and pay 1/2 the tax on that.

2nd Provisional Tax Payment (due at the end of the tax year to which it applies)

If your actual taxable income for the year does not exceed R1m you may pay the tax on the basic amount (see above) less PAYE paid and less the amount already paid as your 1st provisional payment. Alternatively, if you expect your taxable income for the current year to be significantly less than the basic amount, you can enter your estimate and base your payment on that, but if your estimate proves to be less than 90% of the actual taxable income, penalties will be imposed.

If your actual taxable income for the year is greater than R1m, you must determine the actual taxable income for the year and pay the tax on that less PAYE paid and less the amount already paid as your 1st provisional payment. If your estimate proves to be less than 80% of the actual taxable income, penalties will be imposed.

The penalty relating to the 2nd provisional return is 20% of the provisional tax underpaid.

3rd Provisional Tax Payment

Regardless of the date of assessment, the balance of income tax payable (after deducting 1st and 2nd provisional payments) falls due 6 months after the relevant year end (or on 30 September for February year end taxpayers).

From due date, interest at the prescribed rate starts accruing on the outstanding amount until paid.

In order to avoid the imposition of interest, provisional taxpayers may voluntarily pay one or more 3rd provisional payments usually, though not necessarily, starting on the day prior to that on which interest starts to accrue.

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