[Question] Tax question - Please Help guys!

[ShaunK]

Hi guys,

Let's say for example I have a IT Service business (Sole Proprietor). One month I make R3000 and another month I make R8000 and then a bad month of say R1500 and then R10 000

How do I calculate what I have to pay SARS and is it month to month based or is it for a full years business and then calculated?

Any help would be appreciated.

[J7J]

Hi Shaun,

As it is not income from employment as such, you should register for Provisional Tax. You will then pay provisional tax twice (maybe 3 times) a year (for Feb 2012 year end, you will pay Aug 2011 and Feb 2012) with a voluntary tax top-up Sept 2012 - calculated on your estimated taxable income.

You calculate your provisional tax payments based on projected taxable income, therefore income projections are quite important here. You will calculate in Aug 2011 what you think you will end up on Feb 2012 and pay half of the estimated taxes at that time. When Feb 2012 comes, you update your projections for the year and make your second provisional tax payment Feb 2012.

Once you have done your financial statements for Feb 2012 (even if it is in a informal format), you determine whether you have underpaid any taxes. If you have underpaid, you can "top-up" your taxes with a 3rd voluntary payment Sept 2012.

When you do your tax return, you fill out the return with the details of the income and expenses relating to your business (adding other income like employment income and relating employees taxes, if applicable).

On your tax return you don't detail your provisional tax payments made throughout the year like you would do with employees tax (PAYE and SITE) paid. When SARS does your assessment, they will take your provisional tax payments into account to determine your tax liability. (Thanks GeraldeneK for the advice given to someone else's post regarding a question about this!)

I hope this helps.