A taxpayer has a basic amount of zero. The taxpayer’s current year of assessment has a profit of R1 200 000 at the end of July. The estimate for the entire year would be approximately R2 000 000. Must the 1st provisional tax return reflect at least 80%
Author: Peter Surtees
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
You are correct in that you may use the basic amount for the first provisional payment. Relevant tax law Paragraph 19(1) of the Fourth Schedule to the Income Tax Act provides: “(c) The amount of any estimate so submitted by a provisional taxpayer…[in respect of the first period] shall not be less than the basic amount applicable to the estimate in question…”(d) The basic amount applicable to any estimate submitted by a provisional taxpayer under this paragraph shall, for the purpose of this paragraph, be deemed to be- [the taxable income for the previous assessed year of assessment].