By Monique Vanek (Moneywebtax)
The deadline for submission of provisional tax returns for natural persons is 28 February 2013. SARS no longer issues printed IRP6 forms. Penalties could apply where taxpayer estimated are lower than allowed limits.
JOHANNESBURG - With holiday season approaching the first thing on your mind is probably not the deadline for provisional taxpayers to submit their returns. Here's why it should be a priority:
- If you are a natural person you only have until February 28 2013 to submit your IRP6 via eFiling, failure to do so could result in serious penalties, warns Piet Nel, project director for tax at Saica Standards;
- The South African Revenue Service (Sars) no longer issues printed IRP6 returns;
- Taxpayers liable for provisional tax must request their returns by registering for eFiling, calling the Sars Contact Centre or visiting their nearest Sars branch.
As the return will be the final or last estimate of a natural person's taxable income penalties will be levied if the estimate is less than the allowed limits, notes Nel. "Principally," says Nel "a person will avoid these penalties if, for taxpayers with a taxable income of less than R1m, the estimate is more than 90% of the finally assessed taxable income and for those with taxable income of more than R1m, the estimate is more than 80% of the finally assessed taxable income".
The penalty is basically levied at 20% of the amount underpaid, says Nel.
It is only persons with a taxable income of less than R1m, who can use the basic amount, adds Nel.
Now that you've been warned about the penalties you are probably wondering if you are a provisional taxpayer?
According to a note from Saica a provisional taxpayer is:
(a) any person who derives income which is not remuneration subject to employees' tax or an allowance or advance;
(b) any company; and
(c) any person who is notified by Sars that he or she is a provisional taxpayer ie, any person who receives, for example, income such as rental from letting a property, interest from investments or other income from the carrying on of any trade would then be a provisional taxpayer.
The following are not provisional taxpayers:
(a) any approved public benefit organisation
(b) any approved recreational club
(c) any body corporate, share block company or association of persons .
The following persons are exempt from payment of provisional tax:
A natural person (below the age of 65 years) who does not derive any income from the carrying on of any business, if:
(i) the taxable income of that person for the relevant year of assessment will not exceed the tax threshold; or
(ii) the taxable income of that person for the relevant year of assessment which is derived from interest, foreign dividends and rental from the letting of fixed property will not exceed R20 000.
A natural person (65 years or older) if such person's taxable income for that year:
(i) will be R120 000 or less;
(ii) will not be derived wholly or in part from the carrying on of any business; and
(iii) will be derived only from remuneration, interest, foreign dividends, or rental from the letting of fixed property.
Now that you have more certainty as to whether you are a provisional taxpayer or not you are probably looking from some advice:
- Every provisional taxpayer must submit a return of an estimate of the total taxable income which will be derived by them for the year of assessment. For a natural person this will be from March 1 2012 to February 28 2013, says Nel;
- Estimates no longer need to include retirement fund lump sum benefits, retirement fund lump sum withdrawal benefits or severance benefits received by or accrued to the taxpayer during the relevant year of assessment, Nel revealed in this month's Integritax Podcast with MoneyebTax;
- A taxpayer that wishes to object to a penalty must be able to prove that their estimate was not deliberately or negligently understated, notes Nel;
- If you sold assets during the year from March 1 until now or anticipate doing so by the end of February - capital gains need to be included in your estimate.