Third Provisional Tax Payment – What to know
Lets start with the main question: What is Provisional Tax?
Provisional tax is not a separate tax from income tax. It is a method of paying the income tax liability in advance, to ensure that the taxpayer does not have a large tax debt on assessment.
What is the third / 3rd Provisional Tax Payment?
The third provisional payment is an optional additional payment after the end of the tax year. The third provisional tax payment is an opportunity for a taxpayer to make an additional top up payment if there was any shortfall from the first and second provisional tax returns. The 3rd Provisional Tax Payment must be made before the issuing of the assessment by SARS . On assessment issued by SARS the provisional payments will be off-set against the liability for normal tax for the applicable tax year of assessment.
How do you calculate the 3rd Provisional Tax Payment (voluntary payment)?
- The total estimated tax for the full year;
- Less the employees tax paid for the full year;
- Less any allowable foreign tax credits for the full year;
- Less any applicable rebates or medical tax credits;
- Less the amount paid for the 1st and 2nd provisional tax periods.
When should it be paid?
The Third Provisional Tax payment is voluntary and may be made:
- for companies with a year end of the last day of February, and any other person (other than a company), the last business day of September;
- in any other case, within six months of the end of the year of assessment.
The Third Provisional Tax Payment is an opportunity for a taxpayer to make an additional top-up payment if the tax has been underestimated for the year. The Third Provisional Tax Payment helps the taxpayer with unwanted interest when the income tax assessment is issued.
If you are in need of assistance with Provisional Tax, then a registered Tax Practitioner can assist with ensuring you get your payments calculated and submitted in time.
Tax services provided by Zeelie Professional Accountants SA:
- Annual Income Tax Returns
- Dividends Tax Returns
- EMP201 Employee Payroll Tax Returns
- EMP501 Employee Tax Reconciliation Returns
- Income Tax Registrations
- PAYE Registration
- Provisional Tax Returns
- Tax Clearance Certificates
- Tax Directives
- Tax Practitioner Service eg. SARS Liaison
- Tax Structuring
- VAT Registrations
- VAT Returns, monthly or every 2 months
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