SARS organises provisional taxpayers into two groups. Those earning revenues of below R1 million per year, and those earning R1 million plus per annum. SARS refers to these groups as Tier 1 and Tier 2 respectively.
The two tiers are:
• Tier 1 – taxpayers with a taxable income <R1m; and
• Tier 2 – taxpayer's taxable income >R1m.
Let's find out more about each category and SARS's new rules
If you're a Tier 1 provisional taxpayer, SARS says you now need to ensure your estimated tax
due is within 90% of the actual final tax
assessed by SARS.
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In other words, you have a 10% leeway of the final tax
payable to SARS to be wrong.
Example: You estimate your final tax
is R95 000, and you pay this as provisional tax
. On assessment, you actually owe SARS R100 000. You're still within the 10% leeway, so SARS won't penlaise you for underestimating.
Tier 1 provisional taxpayers are also allowed to accept SARS' basic amount.
If you're a Tier 2 provisional taxpayer, you must ensure your estimated tax
due is within 80% of the actual final tax
assessed by SARS. You have a 20% leeway to be wrong.
What to include in your calculation of provisional tax
To work out what to pay in the second provisional tax
period (what pay by the end of February of the following year, or on the approved year end date) your must include:
• The total estimated tax
for the full year;
• Less your employees' tax
paid for the full year;
• Less any allowable foreign tax
credits for the full year;
• Less the amount paid for the first provisional tax