Kindly advise on Provisional tax payer for someone with small business, this person was declared as Provisional taxpayer by sars. which income should submit. Is it all the sales made every 6 month?
Important:
This answer is based on tax law for the tax year ending 28 February 2018.
Answer:
We are not sure what you mean when you say that “this person was declared as Provisional taxpayer by sars”. We agree that, as defined (see paragraph (c) of the definition), a “provisional taxpayer” means “any person who is notified by the Commissioner that he or she is a provisional taxpayer”. This envisages a notice from SARS specifying that the person is a provisional taxpayer. But, according to paragraph (a) of the definition, “any person … who derives by way of income any amount which does not constitute remuneration or an allowance or advance contemplated in section 8(1) …” There is therefore no need for SARS to notify the person as he or she will already be a provisional taxpayer because of the ‘business income’ derived.
In any event, the provisional taxpayer must “during every period within which provisional tax is or may be payable by that provisional taxpayer ... submit to” SARS (unless SARS directs otherwise) “a return of an estimate of the total taxable income which will be derived by the taxpayer in respect of the year of assessment in respect of which provisional tax is or may be payable by the taxpayer”. The estimate must therefore be of taxable income, i.e. after exemptions and deductions, but will not include any retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit or any severance benefit received by or accrued to or to be received by or accrue to the taxpayer during the relevant year of assessment.
It is only where the person is registered as a registered micro business that the bi-annual payments are based on ‘turnover’.