I have a client whose tax affairs are not in order. Should she submit a nil return for first period of 2020? She will probably start earning an income from Sept this year.
Important:
This answer is based on tax law year ending 28 February 2020.
Answer:
We have no idea what guidance is required here. It appears that it relates to provisional tax, and specifically to the first estimate to be submitted before the end of August 2019.
Remember that for the first period, a provisional taxpayer is required to submit a return to the Commissioner which includes an estimate of the total taxable income that will be derived by the taxpayer in the relevant year of assessment. It is paragraph 17(3), of the First Schedule to the Income Tax Act, that requires of (or obliges) the provisional taxpayer to estimate taxable income.
The fact that the provisional taxpayer’s “tax affairs are not in order” is irrelevant (we don’t know what this entails). If there was no ‘income’ during the first period, the estimate must include the expected income for the rest of the year. It would not be correct to merely submit a nil return.
The practice generally prevailing, see issue 3, states that “the returns … must be submitted even if the amount of the provisional tax payment is nil.”