Para 20A - Success!

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We have had an ongoing fight with SARS regarding the raising of Additional tax on the under estimation of provisional tax upon assessment. The e-filing system has not been coded in terms of the Act. They can only be relying on Para 20A in order to impose this additional tax and PARA 20 A clearly states that it cannot be imposed unless their is a liability or a shorfall in the annual assessment. There has to be a deficit in order for this additional tax to be imposed.

I have eventually had my objections allowed! I have been fighting the same issue for years now. It is unfair to impose taxes that the act does not allow.

SARS are also implementing an additional 200% fine for taxpayers, where, upon audit additional assessments are issued due to incorrect information being lodged in terms of Sec 76 (1) of the Act. Sec 76 (2) gives the Commissioner discretion as to whether to impose this additional tax, but according to the auditors, they will be raising this as a matter of course even if it was an innocent error.

[Dave A]

SARS really does seem overly keen on levying punitive penalties at the moment. There really seems to have been a shifting of gears.

So what does this mean in practice? Just how much trouble is a company in if we underestimate the provisional tax return, but we're not paying less than SARS's figures provided?

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Well it depends on the tax structure of the company, first you need to determine what the tax rates are, (according to classification), whether there are taxable losses that are brought forward from previous years that can be offset. Whether there are allowable deductions that will minimise the profit on assessment. So its not just about taking your nett profit for the year and comparing it to the SARS base rate. In any event SARS increase the base rate. The is a 10% differential that is allowed before a penatly is imposed, but interest will be levied (Sec89Quat)

[Dave A]

The is a 10% differential that is allowed before a penatly is imposed, but interest will be levied (Sec89Quat)

That's the bit I might have a little trouble with in one of my companies this year
We'll be paying more than what SARS has estimated in their provisional assessment notice, but for one reason and another, it's proving pretty tricky to estimate what the final tax liability will be. Just too many fairly substantial variables up in the air right now that might throw the questimate way off.