Could you please clarify the situation with regards to provisional tax for an individual who is also registered for turnover tax. For the business which is registered for Turnover Tax we submit a TT02, but do we still submit an IRP6 for the individual? He
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
The turnover tax only replaces the ITR12 in as far as the micro business activities is concerned. So, if the individual derives employment income or investment income (above the thresholds in the annual notice to furnish returns) or capital gains, the return (ITR12) would be required. Section 10(1)(zJ) of the Income Tax basically confirms this - it exempts the amounts received by a micro business from carrying on its business activities from normal tax with the exclusion of investment income or remuneration.
Similarly, if that non-micro business 'income' exceeds the thresholds, provisional tax returns will be required.
In terms of paragraph 7 of the Sixth Schedule, the taxable turnover of a registered micro business excludes, in the case of a natural person, investment income. The Schedule doesn't refer to remuneration, but my view is that remuneration is not derived 'from carrying on business activities' - see paragraph 5 of the Schedule, and is consequently not taxable turnover. in short, investment income and remuneration must therefore not be accounted for on any of the turnover tax returns - the TT0's.