Page 7 - Employees tax
P. 7
PROVISIONAL TAX
Basic Amount
• The basic amount (assessed taxable income), to be used for
estimates, is reduced by taxable capital gains (for companies and
individuals) AND lump sums from funds and employers (for
individuals only).
• If a taxpayer has not been previously assessed, the basic amount is
nil. Based on this fact, “new” taxpayers therefore did not pay any
provisional tax until such time as they have been assessed. Income
tax Interpretation Note 1 however states that where it is a taxpayer’s
first year of assessment, a nil estimate will not be accepted based on
the premise that the ‘basic amount’ is nil. The taxpayer must make a
best estimate of his taxable income.
• At the time that a provisional taxpayer makes a payment, they
themselves must consider when the latest assessment was issued by
SARS (not less than 14 days before submission) – in order to
determine the latest assessed taxable income. In other words, a
taxpayer cannot just rely on the latest assessed taxable as generated
on the IRP 6 form.
• The Commissioner may, under certain circumstances, increase the
basic amount by 8% per annum (The 8% is simple interest i.e. not
compounded)
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