Provisional tax is not a separate tax from Income Tax. It is a method of paying your tax due in advance to the South African Revenue Service (SARS) to ensure you do not pay a large lump sum on your final assessment. The tax liability is spread over the relevant year of assessment.
Payment & Filing Periods:
There are two periods for provisional tax:
- The first period covers the first six months of the year, ending August 31st.
- The second period is a calculation for the entire tax year, with payment generally due by February 28th of the following year.
Basis of Calculation:
- The provisional payment is a calculation of the total estimated tax you will have to pay.
- The goal is to be approximately 90% accurate in determining your provisional tax amount, as required by SARS.
Purpose:
- To save on penalties for "underestimation" of your tax amount.
- To avoid paying large amounts of tax on final assessment.
Income Tax Return (The Final Assessment)
The Income Tax Return is the official submission of your final, detailed figures for the full tax year.
Filing Period:
- The full Income Tax Return, with all the detail, is typically submitted starting from July, after the tax year has closed (February 28th).
Basis of Calculation:
- This is where you submit the exact details of your income and expenses for the full 12-month period.
- The Provisional Tax paid is then credited against the final amount of tax calculated as due on this detailed return.
- Any difference results in an additional payment due to SARS or a refund due to you.