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Until the 2008 tax year, additional tax was imposed if the estimate for the second period was not equal to at least 90% of the taxable income for the year; or the basic amount. The basic amount is the taxable income that was assessed in respect of the previous tax year.
The 2008 Revenue Laws Second Amendment Bill was approved by Parliament and is due for promulgation in January 2009. In terms of this Bill additional tax or penalty will be imposed if the estimate with regard to the second provisional tax return is not equal to at least 80% of the final taxable income for the year. The option of basing the estimate on the basic amount was removed.
The existing provision that SARS may waive the additional tax if the estimate is seriously calculated and is not deliberately or negligently understated was retained.
The amendment was aimed at creating more certainty and accuracy in provisional tax payments to the benefit of both taxpayers and Revenue. More accurate estimates by taxpayers will reduce the number of times that SARS has to invoke paragraph 19(3) of the Fourth Schedule to the Income Tax Act, 1962, and that taxpayers have to respond to SARSs enquiries in this regard.
Taxpayers have for a long time had the option of using actual taxable income for the current year as a basis for estimating the second provisional payment. This option was typically used when taxpayers expected a lower taxable income than the basic amount. These taxpayers were generally able to make estimates to within the required 90% of actual taxable income. Those estimates must be within 80% as from the 2009 tax year in order to avoid additional tax.
SARS realise that these provisions are new to provisional taxpayers. In response to numerous requests from practitioners and representative organisations for more time to implement the new requirements SARS decided to implement a transitional arrangement for second provisional tax payments due on or before 28 February 2009.
In terms of this transitional arrangement, SARS will waive the additional tax imposed under the new legislation where provisional tax payments are based on estimates that are equal to at least 90% of the taxable income for the year or the basic amount.
The new IRP6 provisional tax returns due for submission on or before 28 February 2009 are identical to previous forms except that, in line with the new legislation, they no longer contain a SARS proposed calculation. They will, however, still contain the basic amount for taxpayers information. |
