If you don’t pay provisional tax on 27 February you’ll face these two SARS penalties

Simangele Mzizi, Fsp Business, 12 Jan. 2015

Tags: provisional tax, paying provisional tax, deadline for provisional tax, provisional tax deadline, sars, provisional tax penalties, provisional tax returns

By now you know you have to make your next provisional tax payment on 27 February 2015.

What you may not know is SARS is very strict when it comes to this tax. It has a zero-tolerance policy for taxpayers who don’t pay on time.

In fact, there are two penalties it could impose if you don’t make payment on 27 February.

Read on to find out what they are so you can avoid them at all costs.

SARS will impose these two penalties on you if you don’t pay your provisional tax on 27 February

According to the Provisional Tax 101, SARS could impose:
1. Late submission penalties
If you submit your provisional tax return late, SARS will charge you a penalty ranging from R250 to R16 000 for each month your submission is late.
2. Late payment penalties
Paying your provisional tax after the due date attracts a 20% penalty on the late payment.
But that’s not all…

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Believe it or not, but you could get SARS penalties even if you do make payment on 27 February

That’s right.
Let’s say you estimate your provisional tax payment to be R50 000 for the year. You submit your provisional returns and pay your provisional taxes before the deadline. But, on assessment, SARS finds you should have paid R500 000 in tax for the year.
SARS will then levy a penalty at the applicable percentage on R500 000 - R50 000 = R450 000 under-statement.
In terms of the Tax Administration Act, these are “penalties based on under-statement of liability.”
If you’re a tier one taxpayer (taxpayers with a taxable income <R1m) and you underestimate your provisional tax, SARS could hit you with a 200% penalty.
If you’re a tier two taxpayer (taxpayer’s taxable income >R1m), and you underestimate your provisional tax, you must prove to SARS that the under-estimation is a genuine error. If SARS doesn’t buy your story, you could also face a penalty of 200%.

Is there anything you can do to avoid underestimating your provisional tax and getting a huge penalty?

Here, we explain that to make sure your estimation is correct you must include these items in your calculation:
  • 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 period.

SARS doesn’t take kindly to people who don’t comply when it comes to provisional tax. So pay your provisional tax on or before 27 February to avoid penalties.
PS: Recommended Product: Provisional Tax 101. It covers provisional tax from start to finish and will help you make your February payment seamlessly.

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Hazel 2015-10-12 13:10:53

Good day, Please may you assist me. I submitted my IRP6 in august for 2016/01. At the time my contract had ended in July and I had become unemployed thus my taxable income was very low and I did not need to pay any provisional tax. However, the company I was working for has now offered another contract as of end of Sept, and I am now going to have more income than I expected and it will mean I have tax to pay. My question is do I have to resubmit my 2016/01 and make corrections or can I do a higher estimate in my 2016/02 submission. What penalties will I incur? I am an independent contractor so there is no guarantee of what income I will earn in the next months. Thanking you in advance.


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