Provisional Tax.

All provisional taxpayers are required to remit two provisional tax payments a year. A third voluntary payment may be required to avoid interest being charged.
First Year of Assessment
Where a taxpayer has not been assessed previously, a reasonable estimate of the taxable income must be made. The basic amount cannot be estimated at nil as was previous practice, unless fully motivated.
First Payment- normally due 31 August
One half of the total tax in respect of the estimated taxable income for the year is payable six months before the financial year end. The estimate of taxable income must not be less than the taxable income reflected on the latest assessment. A lower estimate may be used if justified, subject to the consent of SARS.
Second Payment- normally due 28 February
The balance of tax due is payable on or before the last day of the financial year end in respect of the estimated taxable income for the year. As from 1 March 2009 the estimate may not be less than 80% of the taxable income as finally determined including lump sums and capital gains. The basic amount is no longer applicable for the second provisional tax calculation. If the above requirement is not met, a penalty of 20% of the provisional tax underpaid may be imposed.
Third Payment- normally due 30 September
Third provisional payments are only applicable to individuals and trusts with taxable income in excess of R50 000 and companies and close corporations with taxable income in excess of R20 000. Such payments should be made before 30 September in the case of a taxpayer with a February year end and within six months of other year ends to avoid interest being charged.
Permissable Reductions in the Basic Amount for first payment
Capital gains and taxable portions of lump sums are not included in provisional tax estimates for the first period and will therefore not affect the basic amount. If however an estimate lower than the basic amount is used, such amounts must be included. These amounts must however be included in the second and third provisional tax payments.
Estimates
SARS has the right to increase any provisional tax estimate to an amount considered reasonable.
Persons over 65
Persons over 65 years whose taxable income does not exceed R120 000 (2009 : R80 000) are exempt from provisional tax, provided that such income consists exclusively of remuneration, rental, interest or dividends.
Persons under 65
Persons under 65 years who do not carry on business, and whose taxable income does not exceed the tax threshold or whose interest, foreign dividends and rental income does not exceed R20 000 (2008 : R10 000) are exempt from provisional tax.
Directors of Private Companies
As from 1 March 2006 the specific inclusion of directors of private companies in the definition of a provisional taxpayer has been deleted.

Telephone: 021 903 1390 Mobile: 083 759 3300 Fax: 086 652 1914 Email: custcare@vamily.co.za