Everyone is required to register with SARS as a provisional taxpayer and do two provisional tax returns a year. This is irrespective of what you earn – if you have more than one income (such as a second job or receive rental income or receive interest income) or if you run your own business.
Once a year you are also required to file your Annual Tax Return (IT12) with SARS. This serves as a double check that you have paid the correct amount of tax during the year. Provisional tax is a way for SARS to get their money on a bi-annual basis from you instead of waiting until you are assessed after year end.
Companies automatically fall into the provisional tax system – this is a system that makes taxpayers provide for their final tax liability by paying a minimum of two amounts during the course of the year of assessment. Final liability, however, is determined upon assessment. The aim is to help taxpayers meet their liabilities in the form of two payments made from income received during the tax year, instead of in the form of a single, large sum after the end of the tax year. A third payment after the end of the tax year is optional.
The first provisional tax payment must be made within six months of the year of assessment.
The second payment must be made no later than the last working day of the year of assessment.
The third payment is voluntary and may be made:
- within seven months of the year of assessment, where the year of assessment is February, and
- within six months of the year of assessment, for any other year of assessment
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