What You Need to Know About 1st Provisional Tax Return Due 31 August
/1st provisional tax return for 2021 is due on the 31 August 2020 for individuals that are registered for provisional tax and for companies with a financial year end of end of February 2021.
Please note that if we have not received your information by 12 noon on the 31st of August we will be unable to submit your return. This is only to ensure we get your return submitted in time.
Kindly please send us your provisional tax information before the end of August to avoid penalties and interest.
You will know if you are registered by either:
Asking your tax-practitioner
Phoning SARS on 0800 00 7277
On your latest tax assessment, you will see a “Y” next to “registered as provisional tax payer”
If you are a company or closed corporation, you are most definitely registered for provisional tax
Who should be registered as a provisional tax payer?
Employees earning any other income except salary. I.e. rental income, drawings from a business, business income, consulting income, interest income, dividend income, capital gains etc
Any person that SARS says is registered
All companies and closed corporations
What is provisional tax?
Provisional tax is a separate form of tax.
It is like PAYE in the sense that you pay tax on income earned before you actually submit your income tax return. You have to submit two returns during the tax year, the 1st one by the end of August and the second by the end of February i.e. For the 2021 income tax period your 1st provisional tax submission is due at the end of August 2020. The second is then due at the end of February 2021.
How do I calculate my 1st provisional tax?
You start by calculating the expected taxable income for the 2021 income tax period. You can use actual amounts over the expected period or you can use the 2020 actual taxable income and adjust it for expected change in the 2021 income tax period. After you have calculated the taxable income for 2021, you then calculate the tax payable on this income and deduct the PAYE and/or withholding tax already paid. This should then be divided by 2 to give you 6-month result. This amount needs to be paid by the 31st of August 2020.
Please don’t hesitate to phone or contact us if you have any queries or if you need us to assist you.
What we will need to calculate your provisional tax:
If you are a company or business, your expected income and expenses for the first 6 months of your financial year as well as your expected results for the full 12 months of the financial year.
If you are an individual who earns an income from various source, all supporting documentation and expected income and expenses for the first 6 months of the financial year as well as the expected income and expenses for the full 12 months of the financial year.
COVID-19 tax relief from SARS
What is the Provisional Tax Deferral?
The provisional tax deferral allows qualifying taxpayers to pay
First provisional tax period = 15% of total estimated tax liability
Second provisional tax period = 65% of total estimated tax liability
Third provisional tax period = deferred 35%
This applies to first provisional tax payments that are due during the period from 1 April 2020 to 30 September and to second provisional tax payments that are due during the period from 1 April 2020 to 31 March 2021.
Example:
Note: R1 820 000 less payment of R420 000 made for first provisional tax period.
No penalties and interest on the deferred amount.
If you need more information or would like us to calculate your provisional tax contact annja@anlofin.com or esmerelda@anlofin.com or 0116581324.
