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'Does Capital Gains Tax affect provisional taxpayers?'

by , 08 August 2014
When it comes to Capital Gains Tax (CGT) and provisional taxpayers, the question isn't does it affect you, because it does, but how it affects you! This is when things get a bit more complicated as you try to work it out.

Getting your CGT calculations wrong could incur the wrath of SARS, especially if it thinks you're cheating it.

That's why, today we're explaining how CGT affects provisional taxpayers so you don't make any mistakes...

 

Here's how Capital Gains Tax works for provisional taxpayers

 
If you, as a provisional taxpayer, estimate your taxable income for the first, second and third provisional tax period, you must also take your capital gains for the year into account. Although you don't have to do this if you're entitled to base your income tax estimation on your 'basic amount' of last year's taxable income, for example. In doing this, you must exclude any taxable capital gain from the basic amount for the earlier year of assessment. The reason for this is the capital gain is usually irregular.
 
Just remember this one thing to ensure you don't face penalties.
 
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Remember this one thing about CGT for provisional taxpayers to avoid penalties

 
As long you rely on your basic amount (the amount that appears on the IRP 6 form SARS issues you) and it appears on your provisional tax return for the first and second tax period, you won't face penalties. 
 
This, of course, is only if you remember to pay the amount you owe to SARS on time.
 
There you have it. You do have to pay CGT as a provisional taxpayer. Just ensure you estimate your taxable income correctly and use the right basic amount or you'll penalties, interest or, worse, a SARS audit.
 

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