Provisional tax due shortly

Published by Peet Pieterse

August 4, 2020

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.

Not to worry. We’ve got this!

Related posts

CIPC Compliance: Company Secretary and Independent Auditor

CIPC Compliance: Company Secretary and Independent Auditor

A public company or state-owned company must appoint a person knowledgeable or experienced in relevant laws as a company secretary. This is not a requirement for typical owner managed companies. A public company or state-owned company must appoint an auditor. This is...

CIPC Compliance: Use of the company name and registration number

CIPC Compliance: Use of the company name and registration number

A company’s name is registered at CIPC and CIPC will also issue the company with a registration number. A company may trade under a different name but must disclose the actual company name and registration number to any person who enquires after it. Every company must...

Income tax season only opens 1 September 2020!

Income tax season only opens 1 September 2020!

In the past tax season usually opened on 1 July for individual tax return submissions. As a result of COVID19 SARS has implemented a new strategy to reduce the need for taxpayers to potentially visit a SARS branch. This includes an automated assessment for some...

CIPC Compliance: Submission of Annual Return to CIPC

CIPC Compliance: Submission of Annual Return to CIPC

Every year on a company’s/close corporation’s anniversary date the directors/members must submit an Annual Return to CIPC. This originally started off to confirm that companies and close corporations are still active but developed over the years to also collect...

CIPC Compliance: Financial year and financial statements

CIPC Compliance: Financial year and financial statements

A company’s financial year-end date is set when the company is registered at CIPC. In South Africa it can be any date of the year, unlike in other countries where the dates are sometimes fixed. A company can change its year end with a Special Resolution resulting in a...

CIPC Compliance: Accounting- and company-records

CIPC Compliance: Accounting- and company-records

The Companies Act requires a company to maintain certain records. These records must be accessible from the company’s registered office. If they are not accessible from the company’s registered office a notice to this effect must be filed with CIPC. What documents...

CIPC Compliance: Memorandum of Incorporation (MOI)

CIPC Compliance: Memorandum of Incorporation (MOI)

What is a MOI?The term “MOI” is an abbreviation for “Memorandum of Incorporation”. It is a document that sets out the rights, duties and responsibilities of shareholders, directors and other persons involved in a company. Every company registered in South Africa needs...

CIPC Compliance: Solvency and Liquidity Test

CIPC Compliance: Solvency and Liquidity Test

CIPC Compliance (Section 4, 44 and 45): Solvency and Liquidity Test and how it applies to Financial Assistance and director loans. Section 4 of the Companies Act 71 of 2008 refers to what a Solvency and Liquidity test are and how such a test should be done. This...

COVID-19: Assistance to businesses by the SA Government

COVID-19: Assistance to businesses by the SA Government

Due to the national lockdown that applies in South Africa, Small and Medium Enterprises (SMME’s) are negatively impacted. This is also affecting their employees. Please find some information that applies to most businesses. Current government assistance is split into...

CIPC compliance checklist

CIPC compliance checklist

The Company and Intellectual Property Commission (CIPC) introduced a new compliance checklist. All companies that are required to perform an independent review or an audit is required to complete the checklist on an annual basis. The intention of CIPC behind this new...

Share This