'Will I get my money back from SARS if I pay too much provisional tax?'
Tom is a business owner from J'oburg. He knows the 27 February deadline for paying provisional tax is fast approaching.
But he's thinking of not paying his second installment as he's worried he won't get his money back from SARS if he pays too much provisional tax.
Are his concerns valid?
Read on to find out if SARS will refund you if you pay too much provisional tax.
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Here's what will happen if you pay too much provisional tax
explains that provisional tax
requires you to estimate your income for the year of assessment. Once you've calculated the total tax you owe SARS for the year, you pay half of the tax in the first six months of the assessment year (i.e. before 31 August) and the final half no later than the last day of the assessment year (i.e. before the 27 February deadline).
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. So there's no need to worry, SARS will
give you your money back if you paid too much.
If, on the other hand, you paid too little provisional tax on your first and second return, SARS will charge you interest. To shrink these interest charges, you can make a third top-up payment on 30 September. SARS will then add it to your provisional tax account.
If you're due a refund because you paid too much provisional tax, remember the following
The Practical Tax Loose Leaf Service
explains that if the amount you paid with the first and second returns exceeds your final tax liability, you can't claim a refund on your third return. SARS will only refund you the excess once you submit your income tax return and it's done assessing it.
There you have it, proof that you will get your money back if you pay too much provisional tax. But you can avoid paying too much or too little in the first place simply by checking out Provisional Tax 101. It shows you how to
work out your second provisional tax payment correctly and helps you complete your provisional tax return (IRP6) via eFiling so you'll have no trouble meeting the 27 February deadline.