TAX NEWS
Provisional tax changes
Upcoming new income tax legislation will change the amount on which a taxpayer can base their second provisional tax payment. At present, a taxpayer can base their second provisional payment on the basic amount without attracting any penalties should the actual taxable income for the period exceed the estimated taxable income. For years ending after 01 January 2009, a taxpayer need to ensure that their second provisional tax payment is at least 80% of the final amount. The option to base the second tax payment on the basic amount will disappear. The basic amount is the amount reflected on the last available tax assessment from SARS.
In terms of paragraph 20 of the 4
th Schedule to the Act, should the second provisional tax paid fall short of 80% of the amount as finally assessed, the taxpayer will be subject to 20% additional tax on such shortfall.Provisional taxpayers will therefore have to ensure that their tax affairs are up to date to enable them to estimate their taxable income accurately.
Our advice to taxpayers is to do their bookkeeping more frequently, so that they have a better idea what their taxable income for the year will be and thereby avoiding unnecessary penalties.
If you require any tax help in this regard please email us or give us a call and we will be glad to help.
Note:
In terms of transitional arrangements made for the period ended 28
February 2009, SARS will waive the additional tax imposed under the new
legislation where provisional tax payments are based on estimates that
are equal to or at least 90% of the taxable income for the year or the
basic amount.
November 2008