SARS has charged section 89quat(2) interest on the underpayment of provisional tax for my client’s 2018 assessment as well as an under-estimation penalty. Before the assessment the taxpayer had a credit balance, which was more than the final assessment.
Author: Cecile Bothe
Important:
This answer is based on tax law year ending 28 February 2018.
Answer:
Only first, second and third provisional payments in respect of a specific year of assessment are taken into account for the calculation of section 89quat(2) interest. A credit on the assessed account does not have an impact on the provisional tax payable in respect of a subsequent year of assessment. A credit will either be refunded or equalised and section 89quat(4) will be calculated accordingly.
Underestimations will be based on the estimated taxable income on the second period IRP6 return. Provisional tax paid up to the end of the specific year of assessment and no credits on the assessed account will impact on the underestimation penalty levied.