PART III
Provisional Tax
Category: PART III – Provisional Tax
Paragraph 17 (Fourth Schedule) – Payment of provisional tax
17. PAYMENT OF PROVISIONAL TAX
(1) Every provisional taxpayer shall in the manner provided in this Part make payments (called provisional tax) to the Commissioner in respect of his liability for normal tax in respect of every year of assessment.
(2) ……….
(3) Where for the purpose of determining any amount of provisional tax required to be paid by any provisional taxpayer in respect of any year of assessment the liability of such taxpayer for normal tax is required to be estimated in respect of such year, such liability shall be deemed to be the amount of normal tax which, calculated at the relevant rate referred to in subparagraph (4), would be payable by the provisional taxpayer in respect of the amount of taxable income estimated by such taxpayer in terms of paragraph 19 (1) during the period prescribed by this Schedule for the payment of the said amount of provisional tax or if the amount so estimated has been increased by the Commissioner in terms of paragraph 19(3), the amount of normal tax which, calculated at the said rate, would be payable by the provisional taxpayer in respect of the amount of taxable income as so increased, or if the Commissioner has estimated the provisional taxpayer’s taxable income in terms of paragraph 19(2), the amount of normal tax which, calculated at the said rate, would be payable by the provisional taxpayer in respect of the amount of taxable income so estimated.
[Subparagraph (3) substituted by section 41 of Act 88 of 1971 and section 14 of Act 23 of 2015 effective on 8 January 2016]
(4) For the purposes of any calculation of normal tax under subparagraph (3) the rate at which such tax is to be calculated shall be the relevant rate which on the date of payment of the provisional tax in question is in force in respect of the year of assessment in respect of which such provisional tax is required to be paid under this Schedule, or if at the said date the rate has not been fixed, the relevant rate in respect of that year foreshadowed by the Minister of Finance in his budget statement, or if at that date the rate has not been fixed or so foreshadowed, the relevant rate which is in force in respect of the latest preceding year of assessment in respect of which rates have been fixed by Parliament.
(5) The Commissioner may from time to time, having regard to the rates of normal tax as fixed by Parliament or foreshadowed by the Minister in his or her budget statement or to the rebates applicable in terms of section 6(2) of this Act and taking into account any other factors having a bearing upon the probable liability of taxpayers for normal tax, prescribe tables for optional use by provisional taxpayers falling within any category specified by the Commissioner, or by provisional taxpayers generally, for the purpose of estimating the liability of such taxpayers for normal tax, and the Commissioner may prescribe the manner in which such tables shall be applied together with the period for which such tables shall remain in force.
(6) ……….
(7) The provisions of subparagraphs (3) and (4) shall not apply where the liability of a provisional taxpayer for normal tax is estimated in accordance with any tables prescribed for his use under the provisions of subparagraph (5) and not withdrawn under the provisions of subparagraph (6).
(8) ……….
[Subparagraph (8) added by section 51 of Act 101 of 1990, substituted by section 271 of Act 28 of 2011 effective on 1 October 2012, deleted by section 14 of Act 23 of 2015 effective on 8 January 2016]
Paragraph 18 (Fourth Schedule) – Exemptions
18. ………….
[Paragraph 18 amended by section 28 of Act 90 of 1964, section 42 of Act 88 of 1971, section 49 of Act 85 of 1974, section 19 of Act 104 of 1979, section 26 of Act 65 of 1986, section 9 of Act 108 of 1986, section 23 of Act 70 of 1989, section 50 of Act 113 of 1993, section 37 of Act 36 of 1996, section 24 of Act 19 of 2001, section 34 of Act 30 of 2002, section 58 of Act 74 of 2002, section 24 of Act 16 of 2004, section 47 of Act 32 of 2004, section 53 of Act 31 of 2005, section 2 of Act 8 of 2007, section 1 of Act 3 of 2008, section 22 of Act 18 of 2009, section 96 of Act 24 of 2011, section 271 of Act 228 of 2011, section 21 of Act 21 of 2012 and section 8 of Act 44 of 2014, deleted by section 15 of Act 23 of 2015 effective on 8 January 2016]
Paragraph 19 (Fourth Schedule) – Estimates of taxable income to be made by provisional taxpayers
19. ESTIMATES OF TAXABLE INCOME TO BE MADE BY PROVISIONAL TAXPAYERS
(1)
(a) Every provisional taxpayer (other than a company) shall, during every period within which provisional tax is or may be payable by that provisional taxpayer as provided in this Part, submit to the Commissioner (unless the Commissioner 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: Provided that-
(i) such estimate 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; and
(ii) in respect of the year of assessment in which a person dies, no estimate is required to be made in respect of the period ending on the date of death of that person.
[Item (a) substituted by section 54(1)(a) of Act 31 of 2005, by section 271 read with paragraph 90(a) of Sch. 1 of Act 28 of 2011, by section 22 of Act 21 of 2012 and by section 16(a) of Act 23 of 2015 and amended by section 10 of Act 33 of 2019]
(b) Every company which is a provisional taxpayer shall, during every period within which provisional tax is or may be payable by it as provided in this Part submit to the Commissioner (unless the Commissioner directs otherwise) a return of an estimate of the total taxable income which will be derived by the company in respect of the year of assessment in respect of which provisional tax is or may be payable by the company.
[Item (b) substituted by section 49 of Act 94 of 1983, section 271 of Act 28 of 2011 effective on 1 October 2012 and section 16 of Act 23 of 2015 effective on 8 January 2016]
(c) The amount of any estimate so submitted by a provisional taxpayer (other than a company) during the period referred to in paragraph 21(1)(a), or by a company (as a provisional taxpayer) during the period referred to in paragraph 23(a), shall not be less than the basic amount applicable to the estimate in question, as contemplated in item (d) , unless the circumstances of the case justify the submission of an estimate of a lower amount.
[Item (c) substituted by section 49 of Act 94 of 1983, section 271 of Act 28 of 2011 effective on 1 October 2012 and section 16 of Act 23 of 2015 effective on 8 January 2016]
(d) The basic amount applicable to any estimate submitted by a provisional taxpayer under this paragraph shall, for the purposes of this paragraph, be deemed to be-
(i) as respects an estimate submitted by a provisional taxpayer (other than a company) under item (a), the taxpayers’ taxable income, as assessed by the Commissioner, for the latest preceding year of assessment in relation to such estimate, less –
(aa) the amount of any taxable capital gain contemplated in section 26A;
[Item (aa) amended by section 46 of Act 3 of 2008 and section 13 of Act 39 of 2013 and substituted by section 9 of Act 44 of 2014 effective on 1 March 2015]
(bb) the taxable portion of any retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit or severance benefit (other than any amount contemplated in paragraph (eA) of the definition of ‘gross income’ in section 1); and
[Item (bb) amended by section 46 of Act 3 of 2008 and substituted by section 271 of Act 28 of 2011, section 13 of Act 39 of 2013 and section 9 of Act 44 of 2014 effective on 1 March 2015]
(bbA) any amount (other than a severance benefit) contemplated in paragraph (d) of the definition of ‘gross income’ in section 1,
[Item (bbA) added by section 9 of Act 44 of 2014 effective on1 March 2015]
included in the taxpayer’s taxable income for that year of assessment;
[Words following item (bbA) added by section 9 of Act 44 of 2014 effective on 1 March 2015]
(ii) as respects an estimate submitted by a company under item (b), the company’s taxable income, as assessed by the Commissioner, for the latest preceding year of assessment in relation to such estimate, less the amount of any taxable capital gain included therein in terms of section 26A.
: Provided that, if an estimate under item (a) or (b) must be made more than 18 months after the end of the latest preceding year of assessment in relation to such estimate, the basic amount determined in terms of subitems (i) and (ii) shall be increased by an amount equal to eight per cent per annum of that amount, from the end of such year to the end of the year of assessment in respect of which the estimate is made.
[Proviso to item (d) added by section 23 of Act 18 of 2009 and substituted by section 271 of Act 28 of 2011 and section 9 of Act 44 of 2014 effective on 1 March 2015]
(e) For the purposes of item (d), the latest preceding year of assessment in relation to any estimate under this paragraph shall be deemed to be the latest of the years of assessment –
(i) preceding the year of assessment in respect of which the estimate is made; and
(ii) in respect of which a notice of assessment relevant to the estimate has been issued by the Commissioner not less than 14 days before the date on which the estimate is submitted to the Commissioner.
[Subitem (ii) amended by section 52 of Act 101 of 1990, section 87 of Act 45 of 2003, section 271 of Act 28 of 2011 and section 9 of Act 44 of 2014 effective on 1 March 2015]
(2) If any provisional taxpayer fails to submit any estimate as required by subparagraph (1), the Commissioner may estimate the taxable income which is required to be estimated.
(3) The Commissioner may call upon any provisional taxpayer to justify any estimate made by the provisional taxpayer in terms of sub-paragraph (1), or to furnish particulars of the provisional taxpayer’s income and expenditure or any other particulars that may be required, and, if the Commissioner is dissatisfied with the said estimate, he or she may increase the amount thereof to such amount as he or she considers reasonable, which increase of the estimate is not subject to objection and appeal.
[Subparagraph (3) substituted by section 271 of Act 28 of 2011 effective on 1 October 2012 and section 16 of Act 23 of 2015 effective on 8 January 2016]
(4) ……….
(5) Any estimate or increase made by the Commissioner under the provisions of sub-paragraph (2) or (3) shall be deemed to take effect in respect of the relevant period within which the provisional taxpayer is required to make any payment of provisional tax in terms of this Part.
[Subparagraph (5) substituted by section 16 of Act 23 of 2015 effective on 8 January 2016]
(6) Subject to subparagraph (2), if an estimate of a provisional taxpayer’s taxable income in respect of any year of assessment is not submitted in terms of subparagraph (1)(a) or (b) by the last day of a period of four months after the last day of the year of assessment, the provisional taxpayer shall, for the purposes of this paragraph and paragraph 20, be deemed to have submitted an estimate of an amount of nil taxable income.
[Sub-paragraph (6) added by section 12 of Act 16 of 2016]
Paragraph 20 (Fourth Schedule) – Penalty for underpayment of provisional tax as a result of underestimation
20. PENALTY FOR UNDERPAYMENT OF PROVISIONAL TAX AS A RESULT OF UNDERESTIMATION
[Heading of paragraph 20 substituted by section 271 of Act 28 of 2011 and section 10 of Act 44 of 2014 effective on 1 March 2014]
(1) If in respect of a year of assessment the taxable income of a provisional taxpayer, as determined under this Act, is—
(a) more than R1 million and the final or last estimate of taxable income submitted by that provisional taxpayer in terms of paragraph 19(1)(a) or (b) in respect of that year of assessment is less than 80 per cent of the amount of the provisional taxpayer’s taxable income, the Commissioner must impose a penalty, which is deemed to be a percentage based penalty imposed under Chapter 15 of the Tax Administration Act, equal to 20 per cent of the difference between—
(i) the amount of normal tax, calculated at the rates applicable in respect of that year of assessment and after taking into account any amount of a rebate deductible in terms of this Act in the determination of normal tax payable, in respect of a taxable income equal to 80 per cent of the provisional taxpayer’s taxable income; and
(ii) the amount of employees’ tax and provisional tax in respect of that year of assessment paid by the end of the year of assessment; or
(b) R1 million or less and the final or last estimate of taxable income submitted by that provisional taxpayer in terms of paragraph 19(1)(a) or (b) in respect of that year of assessment is less than 90 per cent of the amount of the provisional taxpayer’s taxable income and is also less than the basic amount applicable to that estimate, as contemplated in paragraph 19(1)(d), the Commissioner must impose a penalty, which is deemed to be a percentage based penalty imposed under Chapter 15 of the Tax Administration Act, equal to 20 per cent of the difference between—
(i) the lesser of—
(aa) the amount of normal tax, calculated at the rates applicable in respect of such year of assessment and after taking into account any amount of a rebate deductible in terms of this Act in the determination of normal tax payable, in respect of a taxable income equal to 90 per cent of the provisional taxpayer’s taxable income; and
(bb) the amount of normal tax calculated in respect of a taxable income equal to such basic amount, at the rates applicable in respect of such year of assessment and after taking into account any amount of a rebate deductible in terms of this Act in the determination of normal tax payable; and
(ii) the amount of employees’ tax and provisional tax in respect of such year of assessment paid by the end of the year of assessment:
Provided that any retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit or severance benefit received by or accrued to or to be received by or accrue to the taxpayer during the relevant year of assessment shall not be taken into account for purposes of this subparagraph.
[Sub-paragraph (1) amended by section 25 of Act 72 of 1963, substituted by section 29(1) of Act 88 of 1965, by section 47(1)(a) of Act 89 of 1969, by section 44 of Act 88 of 1971 and by section 51(1)(a) of Act 85 of 1974, amended by section 36 of Act 69 of 1975, by section 50 of Act 94 of 1983 and by section 39(1) of Act 121 of 1984, substituted by section 19 of Act 61 of 2008 and by section 24(1)(a) of Act 18 of 2009, amended by section 271 read with paragraph 91(b) of Schedule 1 of Act 28 of 2011, by section 23(a)-(c) of Act 21 of 2012, by section 10(1)(b) and (c) of Act 44 of 2014 and by section 17(a) of Act 23 of 2015 and substituted by section 13(a) of Act 16 of 2016]
(2) Where the Commissioner is satisfied that the amount of any estimate referred to in subparagraph (1) was seriously calculated with due regard to the factors having a bearing thereon and was not deliberately or negligently understated, or if the Commissioner is partly so satisfied, the Commissioner may in his or her discretion remit the penalty or a part thereof.
(2A) . . . . . .
[Sub-paragraph (2A) inserted by section 10(1)(d) of Act 44 of 2014, substituted by section 17(b) of Act 23 of 2015 and deleted by section 13(b) of Act 16 of 2016]
(2B) Any penalty imposed under subparagraph (1) in respect of a year of assessment must be reduced by any penalty imposed under paragraph 27(1) in respect of payment referred to in paragraph 21(1)(b) or 23(1)(b).
[Subparagraph (2B) inserted by section 10(1)(d) of Act 44 of 2014 and substituted by section 16 of Act 18 of 2023]
(2C) If-
(a) a provisional taxpayer is deemed in terms of paragraph 19(6) to have submitted an estimate of an amount of nil taxable income due to a failure to submit an estimate by the last day of a period of four months after the last day of the year of assessment; and
(b) the Commissioner is satisfied that the provisional taxpayer’s failure was not due to an intent to evade or postpone the payment of provisional tax or normal tax,
the Commissioner may remit the whole or any part of a penalty imposed under subparagraph (1).
[Sub-paragraph (2C) inserted by section 10(1)(e) of Act 44 of 2014 and substituted by section 13(c) of Act 16 of 2016]
(3) ……….
[Subparagraph (3) substituted by section 51 of Act 85 of 1974 and deleted by section 10 of Act 44 of 2014 effective on 1 March 2014]
Paragraph 20A (Fourth Schedule) – Penalty in the even of failure to submit an estimate of taxable income timeously
20A. ……….
[Paragraph 20A inserted by section 25 of Act 89 of 1969, amended by section 45 of Act 88 of 1971, section 52 of Act 85 of 1974, section 40 of Act 121 of 1984, section 88 of Act 45 of 2003, section 271 of Act 28 of 2011, section 24 of Act 21 of 2012 and section 14 of Act 39 of 2013 and repealed by section 11 of Act 44 of 2014 effective on 1 March 2015]
Paragraph 21 (Fourth Schedule) – Payment of provisional tax by provisional taxpayers (other than companies)
21. PAYMENT OF PROVISIONAL TAX BY PROVISIONAL TAXPAYERS (OTHER THAN COMPANIES)
(1) Subject to the provisions of subparagraph (2), provisional tax shall be paid by every provisional taxpayer (other than a company) in the following manner, namely –
(a) within the period of six months reckoned from the commencement of the year of assessment in question, one half of an amount equal to the total estimated liability of such taxpayer (as determined in accordance with paragraph 17) for normal tax in respect of that year, less the total amount of-
(i) any employees’ tax deducted by the taxpayer’s employer from the taxpayer’s remuneration during such period; and
(ii) any tax proved to be payable to the government of any other country which will qualify as a rebate under section 6quat; and
(b) not later than the last day of the year of assessment in question, an amount equal to the total estimated liability of such taxpayer (as finally determined in accordance with paragraph 17) for normal tax in respect of that year, less the total amount of-
(i) any employees’ tax deducted by the taxpayer’s employer from the taxpayer’s remuneration during such year and the amount paid in terms of item (a); and
(ii) any tax proved to be payable to the government of any other country which will qualify as a rebate under section 6quat.
(1A) Subparagraph (1)(a) does not apply where the duration of the year of assessment in question does not exceed a period of six months.
[Subparagraph (1A) inserted by section 8 of Act 21 of 2021]
(2) If the Commissioner has in terms of section 66(13A) of this Act agreed to accept accounts from any provisional taxpayer in respect of any year of assessment drawn to a date falling after the end of such year, the period referred to in item (a) of sub–paragraph (1) shall, notwithstanding the provisions of that sub–paragraph, be reckoned from such date as the Commissioner upon application of the taxpayer and having regard to the circumstances of the case may approve, and in such case the last day of such year of assessment shall for the purposes of item (b) of that subparagraph be deemed to be the day preceding the first anniversary of the said date.
22. ……….
Paragraph 23 (Fourth Schedule) – Provisional tax payments by companies
23. PROVISIONAL TAX PAYMENTS BY COMPANIES
(1) Provisional tax shall be paid by every company which is a provisional taxpayer in the following manner, namely—
(a) within the period ending 6 months after the commencement of the year of assessment in question, one half of an amount equal to the total estimated liability of such company (as determined in accordance with paragraph 17) for normal tax in respect of that year;
(b) within the period ending on the last day of that year, an amount equal to the total estimated liability of such company (as so determined) for normal tax in respect of that year less the amount paid in terms of item (a),
less, in either case, the total amount of –
(i) any employees tax deducted by the taxpayer’s employer from the taxpayer’s remuneration during the relevant period; and
(ii) any tax proved to be payable to the government of any other country which will qualify as a rebate under section 6quat.
[Subparagraph (1) substituted by section 30(1) of Act 88 of 1965, by section 53(1) of Act 85 of 1974 and by section 51 of Act 94 of 1983, amended by section 53 of Act 101 of 1990 and by section 11 of Act 9 of 2005 and renumbered by section 9(a) of Act 21 of 2021]
(2) Subparagraph (1)(a) does not apply where the duration of the year of assessment in question does not exceed a period of six months.
[Subparagraph (2) added by section 9(b) of Act 21 of 2021]
Paragraph 23A (Fourth Schedule) – Additional provisional tax payments
23A. ADDITIONAL PROVISIONAL TAX PAYMENTS
(1) Any provisional taxpayer may for the purpose of avoiding or reducing his liability for any interest which may become payable by him in respect of any year of assessment under section 89quat, elect to make an additional payment of provisional tax in respect of such year.
(2) If any additional payment of provisional tax contemplated in subparagraph (1) is paid after the end of the period ending on the effective date in relation to the said year as determined under section 89quat(1), such payment shall be deemed for the purposes of section 89bis(2) to be an amount of provisional tax which was payable within the said period.
Paragraph 24 (Fourth Schedule) – Determination by Commissioner if estimation cannot be made
24. The Commissioner may absolve any provisional taxpayer from making payment of any amount of provisional tax payable in terms of paragraph 21(1)(a) or paragraph 23(1)(a), if the Commissioner is satisfied that the taxable income which may be derived by such taxpayer for the year of assessment in question cannot be estimated on the facts available at the time when payment of the amount in question has to be made.
[Paragraph 24 amended by section 27 of Act 72 of 1963 and substituted by section 30(1) of Act 88 of 1965, by section 54 of Act 85 of 1974, by section 52 of Act 94 of 1983, by section 12 of Act 44 of 2014 and by section 6 of Act 16 of 2022]