Provisional Tax – What is it and who is Provisional Tax Payer

What is Provisional Tax and for Who is it?

 

What is Provisional Tax?

Provisional Tax is not separate tax, it is only the method of paying tax that is due. The main reason is to ensure the Taxpayer is not paying large amounts on assessment, so is the tax liability spread over the relevant year of assessment. Provisional tax requires the taxpayer to pay at least two amounts in advance during the year of assessment.

Who is  it for, who must be registered for Provisional Tax?

Any person that is receiving income other than salary, is a provisional tax payer.

As defined in paragraph 1 of the Fourth Schedule of the Income Tax Act, No 58 of 1962 :

• natural person, who derives income, other than remuneration or an allowance or advance as mentioned in section 8(1);
• company; or
• person who is told by the Commissioner that he or she is a provisional tax payer

When should I pay the Provisional Tax?

The first provisional tax payment must be made within six months of the start of the year of assessment for 31 st  August or six months after the approved financial year end date.

The second provisional payment must be made no later than the last working of the year of assessment ending 28/29 February.

The third provisional payment is voluntary payment that can be made within seven months of the year of assessment, where the year of assessment end in February, which is 30 September.

Are Provisional Tax Payments refundable?

If you were asking yourself this question, we must disappoint you. Unfortunately Provisional Tax payments are non refundable as is define in paragraph 28. Such a payments are set off against the liability for normal tax for the applicable year of assessment.

If you are having questions or need assistance in regards Provisional Taxes, do not hesitate to contact our  professional team who will gladly assist you.