Provisional Taxes

[crobbertse123@gmail.com]

Good Day All,

I have a question regarding Provisional Tax. Here's a bit of history:

My father opened a company last year July. He hasn't made much money, but it is starting to pick up now. We will be going to SARS to request a VAT number shortly. In the meantime, I am sure he has to pay provisional tax for himself and his company? How do we go about doing so?

[AnnieA]

Good Day All,

I have a question regarding Provisional Tax. Here's a bit of history:

My father opened a company last year July. He hasn't made much money, but it is starting to pick up now. We will be going to SARS to request a VAT number shortly. In the meantime, I am sure he has to pay provisional tax for himself and his company? How do we go about doing so?

Hi There,

Not knowing when your father's Financial year end is : If your father in his personal capacity is registered as a provisional tax payer, he will have to pay provisional taxes yes. The companies provisional tax is going to depend on whether the company is likely to show a profit for the current financial year. The turnover for the entire year going forward will have to be estimated as well as the expenses. Keep in mind any abnormal expenditure and planned expenses that might not already be part of the income statements. If the company reflects a projected or estimated loss, a Zero return will need to be submitted. If a profit is expected , the tax will have to be determined (based on tax rates applicable to different sizes of business) In our case its 28%. Provisional taxes are submitted and paid twice a year (With the option of topping up on payments as well) so for the first period 50% of the estimated tax will be payable. when the second tax period comes around the assessment will have to be updated with current accounting Data and the tax recalculated. This calculated tax less the tax already paid during the previous period will need to be paid. Be careful with the estimation though SARS only permits a certain percentage difference between provisional assessments and your actual Tax liability in the final assessment. The penalties can be harsh