Provisional tax penalties
Provisional Tax Penalties Simplified: Don't Get Caught With a Fine!
Are you a provisional taxpayer? Then listen up! Dealing with estimates and deadlines can be tricky, but don't worry, we've got you covered. Let's take a bite out of those confusing penalties and learn how to avoid them altogether.
1. Late Payment = Late Penalty: Missed a deadline by even a day? Ouch! You'll face a 10% penalty on the total tax owed, plus interest. Mark those August and February due dates in your calendar and avoid the sting. It is important to note that if the deadline falls over a weekend or on a public holiday, the payment must be made at the latest on the last working day before the weekend/public holiday
2. Guestimate Wrong = Pay More: Estimating your annual income accurately is crucial. If your final tax return shows you under-estimated by more than 90% (or 80% if your income is above R1 million), prepare for a 20% penalty (you can use the “basic amount”which is the last year assessed plus 8%). Use last year's income as a guide and try to be as accurate as possible with this year’s workings Oh and, document your calculations to stay safe.
3. Late Return = Big Trouble: Don't delay! Submitting your return after the deadline is basically telling SARS your income is zero. Not true? Guess what? 20% under-estimation penalty coming your way! Avoid the hassle and file on time.
4. Double Whammy? Not Quite: Made a late payment and under-estimated too? Don't panic! SARS won't double-charge you. They'll just knock the late payment penalty off the under-estimation penalty. Phew!
But wait, there's hope! Had a genuine reason for the hiccup? Bank glitch on deadline day? SARS might just forgive the penalty if you have proof. Remember, honesty is the best policy.
The Moral of the Story: Don't wait until the last minute! Keep records, estimate wisely, and mark those deadlines. With a little planning, you can keep those penalties at bay and enjoy your hard-earned cash.
Stay informed, stay compliant, and stay penalty-free
Note: This summary is for general information only and correct at date of publishing. Please consult with a tax professional for specific advice.