Clear up your confusion over provisional tax penalties
The 28 February 2013 deadline for getting your provisional tax in to SARS is coming up soon and panic is setting in. Earlier this week, we wrote about the new penalty nightmare for provisional taxpayers . The South African Institute of Chartered Accountants (SAICA) has noticed there's confusion regarding the provisional tax penalties that SARS can levy, offering some clarity below.
Piet Nel, SAICA's Project Director: Tax says taxpayers don't understand the difference between a penalty raised for understatement of the tax liability in a final tax return – this is levied according to a penalty table and can be from 25% to 200% - and the penalty for taxable income being underestimated for provisional tax purposes.
'The penalty in the event of taxable income being underestimated applies to the second, or final, provisional tax return. The amount of taxable income entered on a provisional tax return
will be underestimated if it is less than certain limits', Nel explains.
These limits depend on if the taxable income finally assessed is less than, equal to, or more than R1 million and this underestimation penalty is fixed at 20%.
'In terms of both the Income Tax Act and the Tax Administration Act, this penalty is deemed to be a percentage-based penalty levied in terms of the Tax Administration Act and it is clear from the legislation that this is not an understatement penalty', Nel advises.
Nel warns that provisional taxpayers
must remember that they have a duty to estimate taxable income for purposes of provisional tax
, for example, for the return due by individual provisional taxpayers
at the end of February this year. If a person fails to submit such an estimate, the person will be liable for another penalty for non-submission of an estimate.
If you're still getting lost in the quagmire of rules, procedures, forms and calculations, help is at hand. Click here
to order the Provisional Tax 101 eBook
and take the hassle out of provisional taxes once and for all!
Note: 5 of 1 vote