1. PROVISIONAL TAX WORKSHOP

2.  Who is liable for Prov Tax  Registration as Prov Taxpayer  Calculation of Prov Tax  Non-compliance to Procedures POINTS FOR DISCUSSION

3. PROVISIONAL TAX What is provisional tax?  It is not a separate kind of tax.  It is intended to assist taxpayers in meeting their tax liabilities.  It prevents large amounts being payable on assessment as it spreads liability over the tax year.

4.  The provisional payment is based on an estimate of total taxable income derived by the taxpayer.  You will be required to make provision for your tax liability by making payments twice a year. 1. Half way through the year of assessment/tax year. 2. End of the year of assessment/ tax year.

5. What is a year of assessment/tax year? Individual 01 March 04 31 Aug 04 28 Feb 05 Company – financial year end can be any month.

6. Who is liable for Provisional Tax?  Any person who derives income, other than remuneration, which exceeds R10 000 per annum (eg taxable investment income, business income, rental income) under 65yrs – R15 000 exempt 65 and older – R22 000 exempt  Any director of a private co  Any member of a close corp  Any co, including a close corp

7. Exemptions from payment of Provisional Tax  Person who derives income solely from remuneration  Person whose income does not exceed the tax threshold  Person whose investment income does not exceed the exempt portion(R15 000 & R22 000)

8. Registration as Provisional Taxpayer  Written application for registration as a provisional taxpayer must reach SARS within 30 days of becoming liable for the payment of prov tax.  Non-submission will result in int & penalties being levied on late payments and late renditions (First time a letter to waive int & penalties will be accepted, the second time not)

9. When must prov tax be paid?  1 st payment > Within 6mnths from the commencement of the year of assessment. > Half of the estimated tax liability for the full year  2 nd payment > Not later than the last day of the year of assessment. > Total actual tax liability for the full year less first payment.

10. Calculation of Prov Tax  Every prov taxpayer must submit an estimate of the total taxable income which will be derived during the relevant tax year.

15. Payment Methods:  Cash  Cheque  FNB Bank Payments  Internet Banking  E-Filing E-Filing is an electronic system that enables taxpayers to: - Submit returns electronically(IRP6) - Make payments electronically. Please visit www.sars.gov.za

16.  Failure to submit an estimate will result in your acceptance of the SARS estimate.  It will also result in additional tax of an amount equal to 20% of the normal tax being charged. NON-COMPLIANCE TO PROCEDURES