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Provisional Tax returns are due at the end of February and with 2011 comes new legislation pertaining to Provisional Tax. Businesses need to know their financial status in order to prepare for their 2nd Provisional Tax return due at the end of February. SARS will issue penalities to companies if their Provisional Tax is out by 10-20% of your total income. If you are not sure what your business profits are and you don’t have the time
to investigate this thoroughly, Page Accounting can handle this for you, ensuring that your business is not issued with unneccesary penalties.
Provisional Tax Legislation
As of January 2010, SARS has organised 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 rules are different for T1 and T2 – Don’t fall into this tax trap and calculate your tax incorrectly.
When you’re calculating your provisional tax, Tier 1 taxpayers can choose to use an estimate of 90% of their actual income, or the basic amount – whichever amount is smaller. But SARS is quick to slap them with a 20% penalty if this estimate is less than the 90% figure, or the basic amount.
Tier 2 taxpayers, on the other hand, can use an estimate that’s 80% of actual taxable income. If SARS finds that you’ve fabricated these figures, or have calculated them incorrectly, you’ll be penalised.
Before you sit down to calculate your provisional tax, you’ll need to collect the following documents:
- Pay Slips
- Invoices
- Proof of your business expenses
- Bank account statements (for the last three months at least!)
- Investment statements
- Details about your medical aid expenses – consult the SARS tax tables for 2010, to find out how much you can deduct
- List of retirement annuity (RA) contributions – consult the SARS tax tables for 2010, to find out how much you can deduct
- List of donations to Section 18(A) charities – consult the SARS tax tables for 2010, to find out how much you can deduct
- Logbook, documenting private and business travel, any expenses related to fuel, maintenance, licensing and insurance, and
- A list of all your capital gains (especially because your capital gain might actually push you over the R1 million income mark, into tier 2).
REMEMBER: To get the IRP6(3) form, needed to submit your provisional tax, you need to go into SARS and request it. As an added bonus for signing up today you will receive the IRP6(3) to download.
Excerpt taken from www.practicaltaxbook.co.za /
All Content. Copyright © 2011. Fleet Street Publications Pty (Ltd)
Disclaimer: Copyright 2010, Fleet Street Publications (Pty) Ltd. ISBN 0-620-30154-6. The information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. No action or inaction should be taken based solely on the contents of this publication; instead, readers should consult appropriate Tax professionals on any tax matter. We do research all our recommendations and articles thoroughly, but we disclaim all liability for any inaccuracies or omissions found in this publication.
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