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Provisional tax penalty

27 March 2014   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical 

The answer to this query is based on legislation as at 2014/03/27. 

Q: 1. Is it correct that SARS levies penalties for underestimation of provisional tax at 20% of the tax calculated on the lower of 90% of actual or the basic amount BEFORE the deduction of the rebate?

2. In determining the tax payable on the basic amount for provisional tax is one allowed to apply preferential tax rates, for which the taxpayer qualifies such as for example 5 year equalisation for a farmer, or Small Business Corporation tax rates in the case of a company or CC, without being penalised for underestimation? 

 

A: The penalty is charged on the difference between the net normal tax which becomes payable on assessment, and the net normal tax as per the estimation. 


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