What happens if you've made an overpayment of provisional tax?
As you know, failing to comply with the law when paying your provisional tax will cost you up to 10% in penalties, interest and additional tax of 20% on the outstanding amount. But do you know what happens when you've complied with your provisional tax obligations and have in fact paid more than your total liability? Read on to find out...
If you've made an overpayment of provisional tax, you'll be glad to know there's a way to get your money back.
Here's what will happen when you make an overpayment of provisional tax
The Practical Tax Loose Leaf Service says that if the sum of the employees' tax and provisional tax which you've paid is more than your total liability for tax for any tax year, the excess amount will be refunded to you.
SARS will also pay interest on the excess at the prescribed rate. The interest will be calculated on the difference from the effective date until the date on which the excess amount is refunded.
Always ask yourself these four questions to ensure you stay on top of your provisional tax year after year:
What is my tax threshold for the current tax year and do I fall within the threshold?
Have I submitted an estimate of my taxable income for the tax year to SARS?
Did I make my provisional tax payments on time i.e. 31 August and 28/29 February?
Do I need to make a third provisional tax payment?
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!