A freelance worker only receiving income from various work done is registered as an Income Tax Payer-Is it compulsory for her to register as a provisional Taxpayer?Or can she do a normal tax return listing the total income and expenses?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
According to paragraph (a) of the definition in paragraph 1 of the Fourth Schedule to the Income Tax Act, “provisional taxpayer” means “any person … who derives income by way of—
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any remuneration from an employer that is not registered in terms of paragraph 15; or
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any amount which does not constitute remuneration or an allowance or advance contemplated in section 8 (1); …”
We accept that the reference to “freelance worker” and “income from various work done” confirms that the individual is not an employee or doesn’t derive remuneration.
The Income Tax Act no longer requires that the person must register as a provisional taxpayer - he or she will already be a provisional taxpayer because of the ‘income’ derived from the independent trade.
Every 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 Act therefore requires of the individual to submit provisional tax returns and the taxable income can’t just be declared in the annual return of income (ITR12).