Why is their a basic income amount and taxable income for the previous year on IRP 6? ITO par 19 (1) (d) (i) why must the previous year amounts be increased by at least 8% ?Apparently you can object only after the IT for the year has been assessed,but whi
Important:
This answer is based on tax law year ending 28 February 2017.
Answer:
We believe that SARS continues to show the ‘basic amount’ and last year assessed on the IRP6, particularly for the first estimate, as information to the taxpayer. The problem is that, to the best of our knowledge, it is not updated if an assessment is issued after the IRP6 became available on the efiling platform. It is relevant to the provisional taxpayer because of paragraph 19(1)(c) of the Fourth Schedule – it alerts the provisional taxpayer that he or she (or it) must be able to justify an estimate of a lower amount.
The reason for the 8% (really 16% when it applies for the first time) was to force taxpayers to not delay the submission of returns of income in order to have a lower basic amount.
What is not subject to objection is where SARS increased the estimate – see paragraph 19(3) of the Eighth Schedule to the Act.
Remember that for the first period, a provisional taxpayer (the company) is required to submit a return to the Commissioner which includes an estimate of the total taxable income (estimate) that will be derived by the taxpayer in the relevant year of assessment. Where ‘the taxpayer becomes unemployed or works part time or is on commission in the new year’ (and in the latter the commission is low), they would constitute ‘circumstances that justify the submission of an estimate of a lower amount.