Your IRP6 Tax Return helps you during Income Tax Season
Most people don't realize the importance that the Provisional Tax Season plays in helping them manage their final tax bill come Income Tax Season.
Filling out correct provisional tax returns helps reduce stress when you get your final tax bill.
This is because the smallest amount of tax you owe is calculated after considering your provisional tax. If done correctly, you should owe very little tax or even get a tax refund.
You will receive an IRP6 for each prov tax return throughout a tax year. It is important to always retain your records for the prescribed period as per SARS guidelines for record retention.
What is an IRP6?
An IRP6 return is a tax return that is completed by a provisional taxpayer. The provisional tax returns are submitted every 6 months with a top up option before end of September.
Provisional tax should be calculated within the parameters of accuracy as set by SARS:
Under R1m – 90% or more
Over R1m – 80% or more
Frequently asked questions
What is Provisional Tax?
Provisional Tax is an advanced tax collection method based on the estimated taxable income of the taxpayer. If you are a Provisional Taxpayer you need to know otherwise you could be surprised with underestimation penalties.
When must I submit my Provisional Tax Returns?
Provisional Tax requirement is assessed each year anew for individuals whereas companies must submit provisional returns irrespective of whether they are dormant or trading. Provisional tax returns must be submitted by these guidelines each year.
Provisional Tax 1 - is due 6 months into your tax year
Provisional Tax 2 - is due 12 months into your tax year
How to file an IRP6?
The provisional tax return is submitted on SARS efiling. The provisional tax payment can be set and once the tax paid reflects then the tax is held to be offset against the tax for the year of assessment.
Who must pay Provisional Tax?
If you earn income other than a salary, then it is likely that you would need to register as a provisional taxpayer.
Other sources of income can include:
- Rental Income
- Investment income in excess of R30 000 per annum
- Trading or Business income
How to calculate provisional tax?
The total tax amount due for the tax year, less employee tax for the full year, less amount paid for provisional tax and less any foreign tax credits for the period. Generally you would estimate provisional tax for the full year and then divide into the tax period, divide by 2 if it is the 1st provisional return.
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