A taxpayer has a basic amount of zero. The taxpayer’s calculated taxable income for the current year of assessment (2021) is R1,200,000 at the end of July 2020. The estimated taxable income for the entire year of assessment would be approximately R2,000,000.
Should the first provisional tax return reflect at least 80% of the taxpayer's estimated taxable income?
The basic amount may be used to determine the first provisional tax payment.
Relevant tax law
Paragraph 19(1) of the Fourth Schedule to the Income Tax Act provides: “(c) The amount of any estimate so submitted by a provisional taxpayer…[in respect of the first period] shall not be less than the basic amount applicable to the estimate in question…”(d) The basic amount applicable to any estimate submitted by a provisional taxpayer under this paragraph shall, for the purpose of this paragraph, be deemed to be - [the taxable income for the previous assessed year of assessment].
Further webinar commentary on Provisional tax calculations and payments can be accessed here.