Provisional tax helps you pay the tax you owe upfront, on the income you earn, at the end of each tax year.
The tax year runs from 1st March 2015 to the last day of 28th February 2016.
And the first tax payment for 2016 is due by 31st August 2015.
This means you're running out of time!
You need to calculate what is due for the whole 2015 tax year and pay half of the tax liability amount now.
But don't make mistakes! You must make accurate predictions of your income as incorrect estimations could result in penalties!
Use the steps below to help you calculate the provisional tax you owe, and get it right the first time.
Has SARS sent YOU a nasty penalty assessment because your provisional taxes were incorrect?
So you've submitted your provisional taxes before the 27 February 2015 deadline. And you were pretty confident that you had everything right… But now you're staring at a nasty letter from SARS, demanding you pay penalties for the errors you made.
You'll be paying SARS an administrative penalty of up to R4 000! And this penalty amount doubles after thirty days… Plus interest. Oh, and don't believe for one second that SARS will listen to your excuses… Pay now, argue later, it says.
Getting the thumbs-up from SARS isn't simply about handing in a return on time. It's also about getting the estimates, calculations and paperwork 100% right… Yet this is where taxpayers most often slip up and find themselves facing serious penalties for non-compliance.
And let's be honest – few small businesses and individuals can afford to cough up the extra thousands SARS demands!
Learn more about Provisional Tax 101
Firstly before you can calculate your provisional tax, you need the following documents:
A list of income items that aren't taxable; and
A list of expenses items that isn't deductible.
Now read on below on how to calculate provisional tax.
Eight steps to calculate your provisional tax.
This is the most important step! You must calculate your estimate taxable income for the tax year
Your company made an annual profit of R750 000.
Calculate the amount of tax you'll pay on this taxable income
Tax on R750 000 taxable income is R210 000 ( R750 000 x 28%).
Subtract the annual tax rebate from this. This gives you the total tax you'll pay for the tax year
Companies don't get any annual tax rebates.
If you're calculating the 1st
provisional tax return you're calculating, then subtract half of the total tax payable for the year and you're left with an amount due for the first period of the tax year.
This is R210 000/2 = R105 000.
How to get your copy of Provisional Tax 101 in four easy steps
Fill in the order form below.
Pay the price of R699, incl Vat.
24 hours after we've captured your order, you'll receive an email from us, with the link where you can download the e-Report.
Click to download and save the e-Report to your computer.
Print it out and use it to save money, avoid penalties and get the thumbs-up from SARS!
With this e-Report, there's no excuse for non-compliance and silly tax management errors anymore.
Learn more about Provisional Tax 101
Subtract any employee's tax deducted for the tax year
Your company paid R150 000 for PAYE. So make no deductions under step 5. The employee's tax is paid on behalf of the employees not your company.
Less any allowable foreign tax credits for the tax year
so R105 000 – R1000 = R104 000
Add any outstanding SARS penalties and interest on this amount. This'll either already be on your provisional tax return, or you can get this information from SARS and include it on your return.
You don't have any penalties or interest on your account. So you'll pay R7 732
If it's the second provisional tax return you're calculating, then be sure to subtract any provisional tax you paid for the first provisional tax period.
R210 000 – R2000 Foreign tax credit for the year – 0 No penalties/ interest for second period – R104 000 First provisional tax payment = R104 000.
There are new provisional tax provisions and they are complicated. If you'd like to register for the Provisional Tax webinar where we'll get you up to speed on the changes so you're ready for your August submission please send your details to firstname.lastname@example.org
and we'll send you more information.