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 28 February 2023, you should have made all the necessary provisional payments towards your tax liabilities for the 2023 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:
- Provisional taxpayers with taxable income of up to R1 million must pay estimated provisional tax within 90% of the actual expected taxable income
- Provisional taxpayers with taxable income exceeding R1 million must pay estimated provisional tax within 80% of the actual expected taxable income.
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 Kajal Chowthee on +27 (0)11 778 6662 or at firstname.lastname@example.org, or Jacobus Brits on +27 (0)44 805 5909 or at email@example.com.