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Don’t miss the provisional taxpayer submission deadline

Not every person who makes money is an employee. There are lots of ways to earn income besides just working for a company, and if you do so, then it’s important that your taxes stay up-to-date too! If your lifestyle mostly consists of non-salary income, say from rental properties, and interest earned on an investment, then you would qualify as a provisional taxpayer.  For this type of taxpayer to avoid paying one large amount in January 2023, which could have a crippling effect on their cash flow, the South African Revenue Service (SARS), has introduced a method of paying the income tax liability in advance over two or even three payments during the relevant tax year.  The first submission and payment are due by the end of August and the last payment by the close of the provisional tax period, which is 23 January 2023.  The option of levitating the financial impact further, a third (middle) payment can be made within the seven months of the year of assessment, that being by the 30 September 2022.

The provisional taxpayer needs to complete an IRP6 return and make the due payments to SARS manually.

  1. How do you register as a provisional taxpayer?

    You can apply online when you first register for a tax number as a provisional taxpayer, or you can make the necessary changes on your SARS eFiling profile.  If you are still unsure, you can visit your nearest SARS branch in person or call the call centre on 0800 00 7277 for assistance.

  2. Correctly complete the IRP6 on eFiling

    1. It is important to ensure the correct period is checked, with the first period ending 31 August for the 2022/23 tax year.
    2. When completing the Turnover section, remember this is your estimate for the full amount that you expect to receive for the entire tax year and not only the amount you have earned up until August (the first 6 months period). In February 2023, this amount can be corrected with the actual recorded income.
    3. The calculation for the full year will be done automatically and this figure will then be divided by two.
    4. Remember, in the estimated tax income section, to minus all business-related expenses as well as any pension fund, retirement annuity fund contributions, and donations.  Additionally, exclude all retirement lump sums received as this would have already been validated by SARS before pay-out.

In the case of any over payment of the provisional tax, SARS will refund the surplus upon completion and submission of the normal tax return.  This refund will, of course, be inclusive of interest.  However, if there is a finding of underpayment, it will, unfortunately, lead to a penalty on the difference between the provisional tax and the normal income tax return. It is imperative to adhere to the due dates stipulated as any late payments will be hit with an immediate 10% penalty on the amount due to SARS, while the whole amount will be further subject to interest at the SARS prescribed rate. If all this seems a little overwhelming, our Experity specialist can provide full comprehensive tax services and advice to all types of taxpayers.  If you need more information about the business of Provisional Tax, don’t hesitate to contact us by email at info@experity.co.za and we will ensure that one of our expert consultants gets in touch with you.