There are several individuals out there who are registered as provisional taxpayers with the South African Revenue Service (“SARS”). These individuals are required to submit provisional tax returns in August and February of each year. They may also wish to submit a tax return in September to make a top-up payment.
The obligation to register as a provisional taxpayer is upon a taxpayer (within 30 day of becoming aware that the taxpayer is a provisional taxpayer). Failing which, the SARS will register them as provisional taxpayers and notify them accordingly. It is however often the case that taxpayers realise that they have been converted from a normal taxpayer to a provisional taxpayer when they receive a rude awakening in the post that they have a provisional tax return outstanding and that SARS has levied penalties and interest.
Loosely speaking, a provisional taxpayer is any person who receives income which is not subjected to employees’ tax. However, the following exemptions apply:
Persons under the age of 65 years
§ The person’s taxable income is below the tax threshold (currently R57 000)
§ The taxable income (after the exemptions) in respect of interest, dividends and rental income does not exceed R 20 000.
Persons over the age of 65 years
§ The persons taxable income is less than R 120 000, provided the persons taxable income is from interest, dividends and rentals. Where any portion of a person’s income is derived from a business, the exemption does not apply.
This year, provisional taxpayers should not sit back and wait for the provisional tax return to arrive in the post as SARS is no longer automatically issuing provisional tax returns. Provisional taxpayers must now request the return from SARS.
As a reminder, the first provisional tax return for the 2011 tax year is due by no later than August 31, 2010. Provisional taxpayers must therefore be pro-active and request the provisional return, complete it, make payment (where required) and submit the return to SARS (even if it is a nil return). It is highly recommended that provisional taxpayers use e-filing as it is easy to request a provisional tax return and submit it to SARS. Non-e-filing users have it a bit more difficult. They can collect a form from their SARS office.
For those individuals who are unsure whether they are registered as provisional taxpayers or not, it is recommended that they contact their local SARS office.
SARS is placing a lot of responsibility on the provisional taxpayer. For those who were unaware that they needed to request their return, time is ticking away and they need to start the process. Those provisional taxpayers who do not request their provisional tax returns from SARS will probably be liable to a penalty and interest at the prevailing rate.
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