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First payment for provisional taxpayers looms

But technical glitches are still an issue.

Provisional taxpayers who have not yet submitted their first tax return for the current tax year are advised to do so as quickly as possible.

Payment is due at the end of August and a 10% penalty on the amount due and interest will be charged on late payments. However, it seems the technical glitches experienced at the start of the 2019 filing season are still around.

The South African Revenue Service (Sars) has acknowledged the “dissatisfaction” taxpayers have expressed over the glitches encountered while trying to submit their tax returns.

Read: Taxpayers battle with glitches after eFiling modernisation 

It appears that problems around logging in, not receiving one-time pins, the inability to upload supporting documents, and data issues impacting filing, including assessments and tax calculator results, have persisted.

“Sars takes these issues very seriously, and all efforts have been made to resolve them expeditiously and minimise the impact on compliant taxpayers who want to fulfil their filing obligations,” the tax agency said in a statement released on July 30.

‘Provisional tax’ is not a type of tax

Marc Sevitz, co-founder and director of TaxTim, says provisional tax is not a type of tax. It is rather a payment mechanism that is intended to assist businesses and individuals to meet their normal tax liabilities. Provisional tax payments are based on the estimated taxable income for the year.

In practice, salaried employees have their pay-as-you-earn (PAYE) tax deducted on a monthly basis and paid over to Sars by their employer.

Taxpayers who earn other income (such as interest on investments or rental income) do not pay the tax on that income on a monthly basis; instead, Sars requires – or allows – them to make payments twice a year, in August and then again in February.

“Taxpayers who are freelancers, or operate as sole proprietors, would also be considered  provisional taxpayers,” says Sevitz.

This system is intended to spread out the tax liability over the year and therefore avoid a single substantial tax payment after the tax year-end, he adds.

Earnings from abroad automatically in the provisional category

Hugo van Zyl, vice-chair of the South African Institute of Tax Professionals’ personal tax committee, says most South African taxpayers working and living abroad fail to understand that they are provisional taxpayers by default.

“They feel shielded by the fact that they are subject to some payroll taxes, yet they forget that the employer is not a Sars-registered employer.”

Van Zyl says that because the employer is tax non-resident it triggers a provisional tax filing obligation in SA.

“Failing to file the provisional tax returns allows Sars to raise penalties for the underestimation of provisional tax as the returns not filed are assumed to have been nil returns.”

Sevitz explains that if the income is declared on the final tax return (ITR12) then Sars will consider this difference to be an understatement of income, and the taxpayer will be penalised heavily.

The importance of an accurate estimate of income

The provisional return form is called an IRP6 and needs to be completed by the end of August and again at the end of February each year, with a possible top-up return and payment in September.

The return that is submitted in August is forward-looking. “That is to say an estimate of the full 12 months’ income and deductions is performed and then the tax is worked out on the taxable income. This is then halved and the taxpayer pays the amount owing.”

Taxpayers should be very careful to ensure that they estimate the correct income on their returns for both August and the final one in February. The February return will represent the full 12 months of the tax year, less the amount already paid in August when the first IRP6 was submitted.

Sait says provisional tax remains a tricky affair. “Dates can easily be overlooked and care is required with calculations. Sloppiness – no matter how innocent – can be costly [in the form of penalties and interest on the penalties].”

Deadlines

The annual tax season kicked off on July 1 and has different submission deadlines for taxpayers. Non-provisional taxpayers who are filing through Sars’s online platform such as eFiling and the MobiApp have until December 4 to do so. Those who prefer to submit their returns at a Sars branch office will be able to visit a branch between August 1 and October 31.

Provisional taxpayers have until the end of January 2021 to file their final return.

Provisional taxpayer deadlines for the year ending Feb 2020
1st payment (tax on estimated income, Mar to Aug 2019)  End Aug 2019
2nd payment  (tax on estimated income, Sep 2019 to Feb 2020)   End Feb 2020
3rd or ‘top-up’ payment (if you underestimated the above)  End Sep 2020
Submission of final tax return              End Jan 2021

 

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What SARS fail to acknowledge is that this is their system and if it doesn’t work then they are to blame entirely for late submissions or no submissions. I have tried to access they system close on 6 times over the last month and I get nowhere due their systems faults. SARS should go on record and state that no penalties or interest will be charged until they fix their system. Self inflicted penalties tends to speed up the process of fixing their own systems and clearing their minds.
It’s about time SARS started respecting the tax paying public instead of these continual threats

It is impossible to get into the SARS system to do efiling.
Why on earth SARS updated their system and imposed it on the public before test running it and getting rid of the glitches, only they and those earning big bucks for the changes will know.
SARS must now put out a statement that they know the new system has serious errors and the public will not be penalised for not being able to get online into the new system.
There is an old saying SARS – “If it aint broken don’t fix it”.

Not sure that it was not broken – it was a terrible system for filling in forms. The three columns just did not work and the font was too small to read what was required but when you increased the size of the displayed portion and tabbed between fields which were hidden it would not display the field. It was one of the worst systems I have worked on – but better than manual filing. Time out is ridiculous and inconsistent – I have been in the process of filling in a field and it will kick me out. Considering the resources available to the state and the importance of them collecting revenue to fund their feeding frenzy one would have thought that they could come up with a better system than this.

I have not filled in forms on the new system so can’t comment – waiting for some of the glitches to be ironed out. Once ironed out in a few years time it may be an improvement on the old one – we will see.

It seems that SARS relies on the public to test their systems rather than doing so before release.

You are so right. In my working years I always said to our system developers, before implementation arrange to test the system at a user’s workstation. Testing yourself wthin your own environment will not be sufficient.

“It is rather a payment mechanism that is intended to assist businesses and individuals to meet their normal tax liabilities.” Not so sure about that statement – I would describe it as a mechanism for the state to collect the taxes sooner and so have more money to spend. If you over pay you are almost guaranteed to be audited to death and to have to wait for a refund.

Well, first you have to be able to get on efiling at all.

I deal with a number of small charities constituted as voluntary associations – registered as taxpayers but unable to register for efiling as SARS insists on a certificate of incorporation in order to get on the system. As they’re not incorporated everything goes registered post to Pretoria…

As for the new system for individuals, it still isn’t able to save or print a partially completed return. The old browser issues have been replaced with new ones (have to switch to Chrome to print). The verification letter has ballooned to demand a whole raft of irrelevancies. On the bright side, I managed to get a simulated calculation for the first time in five years ; but the assessment itself has basic calculation errors, such as not bringing forward prior year balances, deducting the annual exemption from capital losses…

I am glad that I am not alone!! I have completed my return 4 times, only to have it disappear into cyber space! Yet we are at fault if we don’t comply and you cannot mess with the draconian powers that SARS has. So should we all go to our local branch and make SARS ungovernable? Seems to be the only thing left for us to do.

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