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Provisional tax:
what you need to know
If you’re a provisional taxpayer with a February year end – either as an individual, trust or company – you’ll need to make your second provisional tax payment before the end of the month. It’s crucial that you calculate the amount to be paid accurately – here’s what you need to know.
For provisional taxpayers, two provisional tax payments are required during any period of assessment – the first in August and the second in February. This means that by 29 February 2024, you should have made all the necessary provisional payments towards your tax liabilities for the 2024 tax year.
Provisional tax is paid in advance, in anticipation of the taxpayer’s final liability, to reduce this liability and to avoid the payment of additional interest and penalties on assessment. In terms of Paragraph 20 of the Fourth Schedule to the Income Tax Act 1962, a penalty and interest will be levied on the underestimation of income and the resulting underpayment of provisional tax. It’s therefore crucial that an accurate calculation is done in respect of the second provisional tax payment.
When calculating your provisional tax payment, consider the following:
At Sanlam Private Wealth, we provide enhanced tax compliance and accounting services to high net worth and ultra-high net worth clients – both individuals and trusts. For further information, contact Stanley Broun at stanleyb@privatewealth.sanlam.co.za.
The formation and registration of trusts, and the provision of independent trusteeships – both local and offshore.
The creation of BEE, charitable, special and Shariah trusts compliant with regulatory and legislative requirements.
The administration of deceased estates in South Africa and abroad.
Advice on complex structures, asset restructuring and bequests in foreign jurisdictions.
Advice on emigration and immigration, foreign earnings and the application of any double taxation agreements.
Updating trust deeds to ensure they’re in line with the latest changes in the trust environment.
Updating and/or drafting of wills dealing with South African and/or foreign assets.
Advice on the establishment and management of charitable organisations, their tax status and tax deductible donations.
Advice on the potential tax consequences and reporting obligations if you hold a US passport or green card, or if you have children living in the US.
Guidance on the financial implications of life-changing events, such as getting married, divorce or the birth of a child.
Expert advice is crucial in dealing with cross-border estate and tax planning.
Stanley Broun has spent 13 years in Fiduciary And Tax.
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