See More

Accountants urge changes to provisional tax

Feb 16 2012 15:13 Sapa

Related Articles

Manuel: No surprise mining tax

'Budget viewed against downgrade threat'

Busa pleads for no tax shocks in 2012

E-filing rises as more do tax returns

Gordhan: Limpopo needs credible budgets

Johannesburg - Finance Minister Pravin Gordhan needs to introduce some changes for provisional taxpayers in his Budget next week, the SA Institute of Chartered Accountants (SAICA) said on Thursday.

The problem with the provisional tax structure was the underestimate penalty, which was driven off the taxable income numbers without regard to the actual tax paid, SAICA said in a statement.

Project director of tax Muneer Hassan said this resulted in penalties being applied irrespective of whether the actual tax paid by the taxpayer was correct, or if it was an overpayment.

SAICA recommended that the calculation of the underestimated penalty be amended to take into account the actual tax already paid by the taxpayer.

It said the legislation did not recognise the difference when the recipient was a provisional taxpayer.

"If the taxpayer includes the lump sum, as he or she should in the estimate, the system automatically calculates the tax due for purposes of the provisional payment and the taxpayer ends up having to pay more tax than required," said Hassan.

He said if a lower estimate was used to calculate the "correct" tax amount, the SA Revenue Service (Sars) could levy penalties for the underestimation of income.

"Sars levies the penalty because the taxable income was underestimated, but the lump sum was in fact already correctly taxed and the tax itself was not underpaid.

"SAICA proposes that the law is amended to exclude from the estimated taxable income for purposes of provisional tax for both kinds of retirement fund lump sum benefits and also the severance benefits," said Hassan.

Other areas of concern included that retirement lump sums and severance benefits were subject to tax at rates differing from that at which other taxable income was taxed.



Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Add your comment
Comment 0 characters remaining

Company Snapshot

We're talking about:


Johannesburg has been selected to host the Global Entrepreneurship Congress in 2017. "[The congress] will ensure that small business development remains firmly on the national agenda and the radar screen of all stakeholders, the Small Business Development minister said.

Extravagant toys for the rich

What do you get for the person who has everything? Buy them something completely over the top.


Luxury living

The Fast and Furious R40 million
This is the most expensive burger in the world!
Exclusive food items that WILL break the bank
Top 10 most expensive homes in the world

SABudget on Twitter

Twitter icon

Join the Fin24.com conversation by using SABudget every time you tweet.


Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

SARS’s exceeding its collection target:

Previous results · Suggest a vote