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Provisional Tax 2016/01 underestimate
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2015/10/12 at 11:48:17 AM GMT
Posts: 5
Provisional Tax 2016/01 underestimate

Good day, Please may you assist me. My client submitted an IRP6 in august for 2016/01. At the time their contract had ended in July and he had become unemployed thus his taxable income was very low and he did not need to pay any provisional tax. However,  the company he was working for has now offered another contract as of end of Sept, and he is now going to have more income than expected and it will mean there is tax to pay.

 My question is do he have to resubmit his 2016/01 and make corrections or can he do a higher estimate in the 2016/02 submission. What penalties will he incur? He is an independent contractor so there is no guarantee of what income he will earn in the next months. Thanking you in advance

2015/10/12 at 3:53:08 PM GMT
Posts: 64
Provisional Tax


First Provisional Tax payments (due 31 08 of each tax year).

Paragraph 19(1) (c) of the 4th Schedule to  The Income Tax Act provides that the taxpayer (excludes a company) may use a lower estimate than  his basic amount (which is usually the preceding tax year’s taxable income)provided he obtains agreement/consent from SARS before submitting his first provisional tax return. If you are confident that you can  justify a lower estimate (eg due to  the circumstances at the time ), should SARS require you to do so  ,then I believe no further action is required at this stage.

Another option is to consider using SARS Interpretation Note I which enables SARS to use a higher estimate (might even be client’s current basic amount) in terms of paragraph 19(3)and meet with appropriate SARS staff .The above note also indicates that no interest will be charged and no penalties will be imposed if additional provisional tax settled within 14 days.

2015/10/13 at 12:38:44 PM GMT
Posts: 5
Thank you for your answer, appreciate it.



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