SARS - provisional tax question

[W@P]

then the amount is still not "too crazy" its all relative again Just means you had a good year

Couple of months tbh. Privileged and cursed at the same time. This coming year will be hitting even harder.

 

[zerocool2009]

Couple of months tbh. Privileged and cursed at the same time. This coming year will be hitting even harder.

Its a curse to be loaded! Sars is quickly your best friend

 

[Koosvanwyk]

. 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

You can register and unregister as a provisional tax payer using efiling. It is all there with a click of a button,

As long as you follow the ITA all will be good. There is currently no penalty for not filing a provisional return if you should be filing, however if you underpay your 1st and 2nd payments you will get an assessment to pay both a penalty and interest if you underpaid by more than a certain %

 

[NarrowBandFtw]

jirre, just got nailed with this one last night

lump sum payment which basically never happens meant I owe quite a bit, so I delayed submission until last night
but said lump sum meant I started earning too much interest also, now f-ing SARS wants to charge extra for late submission underpayment of provisional tax when I had no f-ing clue I needed to and was not registered as such

by mid-year it was never going to be a case of "qualifying" for provisional tax either, how the fahk can SARS start charging interest on something being late when it was not on the cards by mid year?!?

EDIT: for bonus points, anyone with spare cash who moved it to a dividends earning investment instead of interest just to avoid this crap?

 

[Tomtomtom]

jirre, just got nailed with this one last night

lump sum payment which basically never happens meant I owe quite a bit, so I delayed submission until last night
but said lump sum meant I started earning too much interest also, now f-ing SARS wants to charge extra for late submission of provisional tax when I had no f-ing clue I needed to and was not registered as such

by mid-year it was never going to be a case of "qualifying" for provisional tax either, how the fahk can SARS start charging interest on something being late when it was not on the cards by mid year?!?

Sorry to hear but this what the thread needed, a case study!

What are they charging for late submission of provisional tax, penalty and interest? It'll be calculated automatically with assumptions beneficial to SARS, but I'm sure you can get it remitted if you can show the actual timing made it impossible to anticipate.

EDIT: for bonus points, anyone with spare cash who moved it to a dividends earning investment instead of interest just to avoid this crap?

Yes definitely when you get close to the threshold (R 30k, ridiculously low imo) you can shift into capital growth and/or dividends. Especially since you are already out of your R 23.8k interest exemption anyway, so your 7% rate is closer to 4% after tax for every additional Rand of interest.

As usual first max out your TFSA and consider whether an RA top-up makes sense. Discretionary investments are very expensive.

 

[NarrowBandFtw]

What are they charging for late submission of provisional tax, penalty and interest?

updated my post above to show the exact wording from the assessment which reads:
"Section 89quat(2) interest on underpayment of provisional tax"

no detail on what rate was used or how it was applied, but in total I owe them a fair chunk of change and the interest on underpayment of provisional tax is relatively small at R518

I'm sure you can get it remitted if you can show the actual timing made it impossible to anticipate.

I'm gonna try, but either because my profile is linked to TaxTim or because of this system triggering that I'm now "provisional" none of the dispute options on eFiling seems to work for me, it just says I'm not registered for any tax types and does not let me proceed ... fired off a query to TaxTim

Yes definitely when you get close to the threshold (R 30k, ridiculously low imo) you can shift into capital growth and/or dividends.

I'd be keen to hear how people choose to shift their money to replace low risk, predictable, "cash" yield to have something more tax efficient

 

[Tomtomtom]

I'd be keen to hear how people choose to shift their money to replace low risk, predictable, "cash" yield to have something more tax efficient

Me too. Could be a topic for a whole thread. I think the ideal would be accumulating funds which internally capitalise interest to give you a CGT event on disposal instead of taxable income, but perhaps for obvious reasons, I don't think such a thing exists in SA for cash/bond type assets. You can invest directly in offshore accumulating bond funds, but that's arguably not as low risk due to the forex factor.

 

[zerocool2009]

jirre, just got nailed with this one last night

lump sum payment which basically never happens meant I owe quite a bit, so I delayed submission until last night
but said lump sum meant I started earning too much interest also, now f-ing SARS wants to charge extra for late submission underpayment of provisional tax when I had no f-ing clue I needed to and was not registered as such

by mid-year it was never going to be a case of "qualifying" for provisional tax either, how the fahk can SARS start charging interest on something being late when it was not on the cards by mid year?!?

EDIT: for bonus points, anyone with spare cash who moved it to a dividends earning investment instead of interest just to avoid this crap?

Its very simple. Buy ETF's that is paying every 3 or 4 months out!

 

[yogidabear]

Me too. Could be a topic for a whole thread. I think the ideal would be accumulating funds which internally capitalise interest to give you a CGT event on disposal instead of taxable income, but perhaps for obvious reasons, I don't think such a thing exists in SA for cash/bond type assets. You can invest directly in offshore accumulating bond funds, but that's arguably not as low risk due to the forex factor.

You dont know what tax rate they have, or if / when they need access to the lump sum mentioned. However what about an endowment?

 

[NarrowBandFtw]

Its very simple. Buy ETF's that is paying every 3 or 4 months out!

when you say it like that it is simple, sure ... BUT ...

which ETF's? do they pay out consistently? do they mostly pay local dividends? foreign? or interest income? which all have different tax implications

do they have stable capital growth as well or not?

there's much to consider when choosing ETFs

 

[zerocool2009]

when you say it like that it is simple, sure ... BUT ...

which ETF's? do they pay out consistently? do they mostly pay local dividends? foreign? or interest income? which all have different tax implications

do they have stable capital growth as well or not?

there's much to consider when choosing ETFs

That is some homework for you.

I would suggest Satrix Top40, and FNB Top 40. Both pays out 4 times a year. Dividends TAX at 20% (if you are not investing in a TFSA).