Topical Issues

Provisional tax reporting period – 28 February 2018

For all individuals, the second provisional tax payment for the 2018 year of assessment has to be made to the South African Revenue Service (“SARS”) by the close of business on Wednesday, 28 February 2018. In this regard, please note the following:

  • Tax must be calculated on the taxpayer’s total estimated taxable income for the year;
  • Rebates are deducted;
  • Employees’ tax paid for the 12 months must be deducted together with any foreign taxes that are subject to the section 6quat rebate;
  • The first provisional tax payment must be deducted; and
  • Any remaining difference must be paid to SARS.

Please note that the taxable portion of any aggregate capital gain for the 2018 tax year must be included in the second provisional tax payment calculations but any retirement lump sum benefits or severance benefits may be left out of the estimate of taxable income for provisional tax purposes.

It is important to note that paragraph 27 of the Fourth Schedule of South Africa’s Income Tax Act No. 58 of 1962 (the “Act”) provides that if the provisional tax is not paid by the last day of the tax year, a penalty of 10% of the amount not paid will be levied on the taxpayer. In addition, section 89bis of the Act provides that interest at the prescribed rate will be payable for as long as the amount remains unpaid.

As if the above penalty is not sufficiently draconian, paragraph 20 of the Fourth Schedule of the Act provides for a penalty of typically 20% of the taxpayer’s total final tax liability for a particular year of assessment if the final provisional tax liability estimate for the year is understated and strict legislation governs the imposition of this particular penalty.

In light of the provisional tax legislative requirements, please feel free to contact us on either (011) 516 9803 or (073) 229 8974, or by email at graeme@jnsfinancialservices.co.za, should you require any assistance with your February 2018 provisional tax return.