Individual taxpayers who are registered as provisional taxpayers as well as all companies, close corporations and trusts with a February year end must submit their first provisional tax return for the 2021 tax year by the end of August. They also have the option to submit a third provisional tax return for the 2020 tax year by the end of September.
What is the first provisional tax return?
This is 50% of the estimated tax based on the estimated taxable profit for the period 1 March 2020 – 28 February 2021. The return as well as payment is due by the last working day of August. A 10% penalty applied if payment is made late. The submission of the return is compulsory even if there is no tax payable.
What is the third provisional tax return?
This is a voluntary return based on more accurate numbers for the period 1 March 2019 – 29 February 2020. It relates to the previous financial year. This give a taxpayer the opportunity to make an additional, voluntary payment to SARS to reduce any possible interest. Although the tax return is only due at a later stage SARS will start calculating interest on any amount due to them from 1 October. There are no penalties involved. The return plus payment is due at the last business day of September.
What is the impact if my estimate is wrong?
There are no automatic penalties if your estimate is incorrect, BUT you need to make sure that you applied due care when performing the estimate. If not, SARS can apply penalties. This is especially important this year where the COVID19 lockdown has had a major impact on the profitability of companies and on the timing of such profitability. At this stage it may appear as if the company is heading for a tax loss and you may be tempted to submit a nil payment return. However (we hope) business picks up over the next 6 months resulting in a profit for the year. SARS may then request the detail of your working for submitting a nil payment return in August.
What if my company/CC does not have a February year end?
If you do not have a February year end you will need to calculate when your returns are due. The 1st provisional tax return is due 6 months before year end. The 3rd provisional tax return is due 7 months after year end. Then there is also the second provisional tax return due on year end.
How do I submit these returns?
These returns are all submitted via e-filing. PPHC Global takes care of these submissions for our tax clients and will be in contact during the month of August.
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