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Five provisional tax myths dispelled so you can pay your tax on time and avoid penalties

by , 03 March 2015
There are a lot of myths about provisional tax.

These often lead to taxpayers neglecting their tax duties, over-paying or worse, underpaying on their provisional tax obligation.

As the 27 February deadline for provisional tax approaches, it's crucial you know the facts about provisional tax so you can make your payment correctly and on time.

To help you with this, today we uncover five of the common myths about provisional tax.

Know the real truth about provisional tax so you can make timely payments and avoid SARS fines

Myth #1: Provisional tax is an additional tax
Fact: Provisional tax isn't an additional tax. It's just another way to settle your tax liability so SARS gets a regular stream of tax from you.
On its website, SARS explains that 'this method of paying tax due ensures you don't pay large amounts on assessment, as the tax load is spread over the relevant year of assessment.'

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Don't know where to start?
Or how to calculate the tax?
Click here to get your hands on a tell-all guide today! It'll walk you through every step in the provisional tax process, so you'll never put a foot wrong again!
Myth #2: Provisional tax only applies to individuals
Fact: Provisional tax applies to certain individuals, companies, close corporations and Trusts who earn income from business interests or investments.
To be on the safe side, check out this article. In it, we outline the criteria you must meet to pay provisional tax.
Myth#3: You only have to pay provisional tax once a year
Fact: You settle your provisional tax bill in three payments.
1. As a provisional taxpayer, your first payment is due by 31 August or six months after the approved year-end date. (If your year end is December 2014, then you'll pay this in June 2015)
2. Your second payment is due by February of the following year, or on the approved year-end date. This is the payment you need to make before 27 February 2015. Check out this article to find out how to work out your second provisional tax payment correctly. (If your year end is December 2014, then you'll pay in December 2015)
3. Your third payment (a voluntary top-up payment) is due by 30 September, or six months after the approved year-end date. (If your year end is December 2014, then you'll pay in July 2016).
You make this third top-up payment if you paid too little provisional tax on your first and second return. It's a great way to reduce the penalties SARS charges you for not paying enough.
Myth#4: Provisional taxpayers don't get their money back if they pay too much provisional tax
Fact: SARS gives you your money back if you paid too much provisional tax.
In this article, we explain that SARS will credit the tax you paid from the first and second payments against any tax you owe at the end of the tax season. If you paid too much provisional tax, SARS will refund you.
Myth #5: Provisional taxpayers can use any tax form to pay provisional tax
Fact: SARS only accepts a provisional tax return (IRP6) when it comes to provisional tax payments.
There are specific forms for each different provisional taxpayer:
  • Individual taxpayers must use an IRP6(i);
  • Trusts must use an IRP6(T); and
  • Companies and Close Corporations must use an IRP6(c).
Keep in mind that SARS no longer issues IRP6 returns to provisional taxpayers. You have to ask for the return using these channels:
  • eFiling;
  • The SARS Contact Centre;
  • The SARS branch office; or
  • The Taxpayer Service Centre.
Now that you know the facts about provisional tax, make your payment on time. And remember, if you don't pay your provisional tax on 27 February, SARS will impose late submission penalties and late payment penalties.
What's more, you could get SARS penalties even if you do make payment on 27 February if you underestimate your provisional tax. So make sure your calculations are correct as well. If you need help, check out Provisional Tax 101. 

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