SARS - provisional tax question

[1am7h30n3]

Advice from any tax experts please!

I filed my income tax return (ITR12) as normal, I had to pay in quite a lot extra this year.

I got below notification from SARS.

Thank you for filing your 2024 income tax return.
Based on the information submitted in your income tax return you are a provisional taxpayer, but you did not file provisional tax returns.
A provisional taxpayer typically includes someone who receives income from sources other than, or in addition to employment income, for example interest, dividends, foreign dividends and/or rental from the letting of fixed property, when added together exceeds taxable income of R30 000 per tax year.
A provisional taxpayer is required to submit provisional tax returns (referred to as IRP6 returns) on a six-monthly basis that reflects an estimate of taxable income for the year of assessment. Provisional tax returns can be accessed, completed, submitted and paid on eFiling.

So I think SARS is correct in saying that I should be a provisional taxpayer, based on income from sources in addition to employment income that exceeds taxable income of R30k per tax year.

Does this apply to the next tax year, or have I already messed up by not realizing that I should be a provisional taxpayer (in which case I should have submitted returns already) and would I have to then pay penalties now? Do I have to perhaps cancel my submitted ITR12 and resubmit an IRP6 (x2)? Or do I just leave the ITR12 that I already submitted as is and submit an additional IRP6 (x2)?

 

[Purply]

They've been telling me this for years already and yet I just keep submitting my ITR12's since they automatically deduct whatever is needed.

 

[rh1]

I was going to say, get your ass to an accountant, but after reading @Purply advice, I am not sure.

 

[1am7h30n3]

They've been telling me this for years already and yet I just keep submitting my ITR12's since they automatically deduct whatever is needed.

I mean, that does sound like the easiest way of dealing with this... But... What if they come after me/you in a few years time and claim some penalties or something?

 

[1am7h30n3]

I was going to say, get your ass to an accountant, but after reading @Purply advice, I am not sure.

I'm still thinking I can sort this out myself, just a question of figuring out what I need to do, I think it's going to come down to just submitting as a provisional tax payer, but I can call SARS and confirm with them if need be.

 

[Sir Bob]

Even if you are a provisional tax payer you still need to submit your ITR12 that's the annual tax return.
If you meet the requirements to be a provisional tax payer you need to file an IRP6 twice a year end of August and end of February.
August is the 1st and is not important to get 100% spot on but important to submit something.
February is the 2nd and very important to get correct if you underpay SARS will raise penalties and interest once you file your ITR12

Look at your return and check if SARS raised penalties and interest for the past year.
If you just submit your return and pay the assessed amount without checking the IT34A I would suggest you find an account to help you.

 

[Tomtomtom]

Does this apply to the next tax year, or have I already messed up by not realizing that I should be a provisional taxpayer (in which case I should have submitted returns already) and would I have to then pay penalties now? Do I have to perhaps cancel my submitted ITR12 and resubmit an IRP6 (x2)? Or do I just leave the ITR12 that I already submitted as is and submit an additional IRP6 (x2)?

Phone them and ask. It's a good question what they do about this situation of first-time "conversion" into provisional.

You may need to submit your 2025/1 which was due end-August. Otherwise the next filing will be end-Feb estimating your full year's tax for the 2025 tax year.

Hopefully you won't have to submit anything else for the 2024 tax year which closed in February. It'll be bad news penalties-wise if you do.

 

[1am7h30n3]

Even if you are a provisional tax payer you still need to submit your ITR12 that's the annual tax return.
If you meet the requirements to be a provisional tax payer you need to file an IRP6 twice a year end of August and end of February.
August is the 1st and is not important to get 100% spot on but important to submit something.
February is the 2nd and very important to get correct if you underpay SARS will raise penalties and interest once you file your ITR12

Look at your return and check if SARS raised penalties and interest for the past year.
If you just submit your return and pay the assessed amount without checking the IT34A I would suggest you find an account to help you.

Ahhh, thank you, I didn't even know that it's both ITR12 and IRP6, I thought it was one or the other. Nice. I'm quite possibly in way over my head here!

 

[BigAl-sa]

This whole provisional tax thing is a load of bollocks if you are trying to save for/during retirement. You have people earning a salary of R500k+ pa with no savings and they don't have to bother with provisional tax. A pensioner earning R160k pa with interest bearing savings earning R31k pa has to go through the schlep of provisional tax.

Easy to say get an accountant, but those things are expensive...

 

[Sir Bob]

This whole provisional tax thing is a load of bollocks if you are trying to save for/during retirement. You have people earning a salary of R500k+ pa with no savings and they don't have to bother with provisional tax. A pensioner earning R160k pa with interest bearing savings earning R31k pa has to go through the schlep of provisional tax.

Easy to say get an accountant, but those things are expensive...

The person earning 500k pa is paying tax every month and will pay much more tax compared to the person earning 160k+ interest.
You can find a cheap accountant if the returns are as simple as your scenario.

 

[Purply]

I mean, that does sound like the easiest way of dealing with this... But... What if they come after me/you in a few years time and claim some penalties or something?

It's been years and haven't seen any penalities for not submitting any IRP6. They literally insert the extra amount you've made via whatever, in my case interest, onto your ITR12.

I'm not trying to convince you to go this route, just giving my experience with it so far.

Granted I should probably do as they ask, but couldn't be bothered since they literally have access to all my financials and now want me to do extra work for them pffft, they can do it themselves.

 

[airborne]

I mean, that does sound like the easiest way of dealing with this... But... What if they come after me/you in a few years time and claim some penalties or something?

What penalties could they potentially charge if they say the IRP6 returns have been due for say the last 4yrs?
Would they even want to charge penalties considering you have still essentially been paying the correct tax and by the due date?

 

[BigAl-sa]

If you JHB based and want need an accountant

The person earning 500k pa is paying tax every month and will pay much more tax compared to the person earning 160k+ interest.
You can find a cheap accountant if the returns are as simple as your scenario.

Not R160k+ interest, a pension of R160k.

My question remains, why should the person earning so little have to go through this inconvenience? It's not going to make any difference to the gravy train.

SARS has access to all formal investments made, so why not just leave it at the annual tax return date. If the investments were underhand, they wouldn't be declared anyway.

Time to invest in $ and store it in a sofa.

 

[Sir Bob]

It's been years and haven't seen any penalities for not submitting any IRP6. They literally insert the extra amount you've made via whatever, in my case interest, onto your ITR12.

I'm not trying to convince you to go this route, just giving my experience with it so far.

Granted I should probably do as they ask, but couldn't be bothered since they literally have access to all my financials and now want me to do extra work for them pffft, they can do it themselves.

I would guess you have an RA and medical deductions that off set the tax that should be paid on your extra income.
If you filed provisional returns they would have been nils anyway.

 

[Purply]

I would guess you have an RA and medical deductions that off set the tax that should be paid on your extra income.
If you filed provisional returns they would have been nils anyway.

Yeah I still get a small amount out, but that will probably change next year with me having to pay in.

 

[Sir Bob]

Yeah I still get a small amount out, but that will probably change next year with me having to pay in.

That is the reason you don't have to file IRP6s.
Once you have to pay in SARS might penalise

 

[BigAl-sa]

The person earning 500k pa is paying tax every month and will pay much more tax compared to the person earning 160k+ interest.
You can find a cheap accountant if the returns are as simple as your scenario.

FWIW, the pensioner earning R160+ pa is also paying tax every month, which is why I chose the number.

 

[rh1]

This whole provisional tax thing is a load of bollocks if you are trying to save for/during retirement. You have people earning a salary of R500k+ pa with no savings and they don't have to bother with provisional tax. A pensioner earning R160k pa with interest bearing savings earning R31k pa has to go through the schlep of provisional tax.

Easy to say get an accountant, but those things are expensive...

Logic and government bureaucracy cannot coeixist!

 

[1am7h30n3]

I re-read my ITA34 notice of assessment and I was charged extra for "interest on underpayment of provisional tax" so I'm pretty sure that means no additional penalties. I still haven't spoken to SARS about it.

 

[brucebru]

I'm in the same boat. Have never paid provisional tax before and received the same comms as part of my SARS assessment last year (after receiving additional income through investments). After reading Purply's responses, I think I have also going to not submit them this year and see what happens. Once I register as a provisional payer, then I would expect them to be very stringent in terms of late payments etc... but since the system still doesn't have me registered as such, I would imagine they'd be happy as long as you are able to make the payments on time when submitting your ITR12... here's hoping