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Do you fall into one of these three categories? If so, you're exempt from provisional tax

by , 03 September 2013
The provisional tax payment system is based on your submission of two compulsory provisional tax returns and payments. You can then submit a third voluntary provisional tax return and payment. Your provisional tax payments are advance payments for your normal tax liability for that year. But not everyone is allowed to pay provisional tax. You're exempt from provisional tax if you fall into one of these three categories...

The Practical Tax Loose Leaf Service defines a provisional taxpayer as:

  • A person who's income doesn't qualify as remuneration or an allowance or advance;
  • A company (including close corporations);
  • Any person who's notified by SARS that he's a provisional taxpayer.

But in terms of the Income Tax Act, the following persons are exempt from provisional tax.

You'll be exempt from provisional tax if you fall into one of these three categories:

#1: You're a non-resident and own or charter ships or aircrafts.

#2: You're under the age of 65 and don't earn income from running a business and your taxable income won't be more than the tax threshold or your taxable income from interest, dividends or rental income isn't more than R20 000. The tax threshold is currently fixed at R63 556.

#3: You're over the age of 65 years and SARS is satisfied that:

  • Your taxable income won't be more than R120 000,
  • You won't be earning income from running a business, and
  • Your income will come from remuneration, interest, dividends, or rental income for letting of fixed property.

Well there you have it. Knowing whether or not you're exempt from provisional tax will ensure you comply with the Income Tax Act.

PS. We recommend you check out: Provisional Tax 101. It gives you the step-by-step advice you need to estimate, calculate and pay over your provisional tax correctly  - yourself!


 

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