Category: Fourth Schedule – Amounts to deducted or withheld by employers and provisional payments in respect of normal tax

FOURTH SCHEDULE

 

Fourth Schedule added by section 19 of Act 6 of 1963 and amended by section 16 of Act 140 of 1993, section 3 of Act 168 of 1993.

 

FIFTH SCHEDULE

 

Fifth Schedule amended by section 26 of Act 89 of 1969, ssection 50-51 of Act 88 of 1971, section 24-27 of Act 90 of 1972, ssection 58-62 of Act 85 of 1974, ssection 34-35 of Act 103 of 1976, section 18 of Act 101 of 1978, section 31 of Act 104 of 1980, ssection 31-32 of Act 91 of 1982, ssection 56-57 of Act 94 of 1983, ssection 46-47 of Act 97 of 1986 and section 58 of Act 59 of 2000 and repealed by section 58 of Act 8 of 2007.

Paragraph 19 (Fourth Schedule) – Estimates of taxable income to be made by provisional taxpayers

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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 5 (Fourth Schedule) – Personal liability of employer for payment of employees’ tax

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5.

(1)     Subject to the provisions of subparagraph (6), if an employer is personally liable for the payment of employees’ tax under Chapter 10 of the Tax Administration Act, the employer shall pay that amount to the Commissioner not later than the date on which payment should have been made if the employees’ tax had in fact been deducted or withheld in terms of paragraph 2.

[Subparagraph (1) substituted by section 19(a) of Act 18 of 2009, by section 271 read with paragraph 79 of Schedule 1 of Act 28 of 2011, by section 38 of Act 20 of 2021 and by section 5 of Act 16 of 2022]

(1A)  The liability of the employer as contemplated in paragraph 2 must be deemed to have been discharged if the employer made payment of the outstanding employees’ tax in terms of subparagraph (1).

(2)     Where the employer has failed to deduct or withhold employees’ tax in terms of paragraph 2 and the Commissioner is satisfied that the failure was not due to an intent to postpone payment of the tax or to evade the employer’s obligations under this Schedule, the Commissioner may, if he is satisfied that there is a reasonable prospect of ultimately recovering the tax from the employee, absolve the employer from his liability under sub–paragraph (1) of this paragraph.

(3)     An employer who has not been absolved from liability as provided in sub–paragraph (2) shall have a right of recovery against the employee in respect of the amount paid by the employer in terms of sub–paragraph (1) in respect of that employee, and such amount may in addition to any other right of recovery be deducted from future remuneration which may become payable by the employer to that employee, in such manner as the Commissioner may determine.

(4)     Until such time as an employee pays to his employer any amount which is due to the employer in terms of sub–paragraph (3), such employee shall not be entitled to receive from the employer an employees’ tax certificate in respect of that amount.

(5)     Any amount which an employer is required to pay in terms of sub–paragraph (1) and which the employer does not recover from the employee shall, insofar as the employer only is concerned, for the purposes of section 23(d), be deemed to be a penalty due and payable by that employer.

(6)     The provisions of sub–paragraph (1) shall not apply in respect of any amount or any portion of any amount of employees’ tax which an employer has failed to deduct or withhold and in respect of which the provisions of sub–paragraph (3) of paragraph 28 apply.

Paragraph 20 (Fourth Schedule) – Penalty for underpayment of provisional tax as a result of underestimation

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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 6 (Fourth Schedule) – Failure to pay employees’ tax by employer

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6.

(1)     If an employer fails to pay any amount of employees’ tax for which the employer is liable within the period allowable for payment thereof in terms of paragraph 2 SARS must, in accordance with Chapter 15 of the Tax Administration Act, impose a penalty equal to ten per cent of such amount.

[Subparagraph (1) (pending amendment by section 14(1)(a) of Act 61 of 2008 repealed by section 271 read with paragraph 193 of Schedule 1 of Act 28 of 2011) substituted by section 271 read with paragraph 80(a) of Schedule 1 of Act 28 of 2011, by section 39 of Act 20 of 2021 and by section 6 of Act 21 of 2021]

(2)     ……….

(3)     ……….

(4)     ……….

Paragraph 20A (Fourth Schedule) – Penalty in the even of failure to submit an estimate of taxable income timeously

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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)

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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 9 (Fourth Schedule) – Employees’ tax deduction tables

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9.

(1)     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 budget statement and to any other factors having a bearing upon the probable liability of taxpayers for normal tax, prescribe—

(a)     deduction tables applicable to such classes of employees as the Commissioner may determine, taking into account the rebates applicable in terms of section 6; and

(b)     the manner in which such tables shall be applied,

and the amount of employees’ tax to be deducted from any amount of remuneration shall, subject to the provisions of subparagraphs (3) and (4) of this paragraph and paragraphs 10, 11, 11A (4) and section 95 of the Tax Administration Act, be determined in accordance with such tables or where subparagraph (3) or (4) is applicable, in accordance with that subparagraph.

[Subparagraph (1) substituted by section 39 of Act 88 of 1971 and by section 32(a) of Act 103 of 1976, amended by section 29 of Act 104 of 1980 and by section 46 of Act 101 of 1990 and substituted by section 55 of Act 59 of 2000, by section 21(1)(a) of Act 19 of 2001, by section 7(1)(a) of Act 16 of 2016 and by section 14 of Act 18 of 2023]

(2)     Any tables prescribed by the Commissioner in accordance with sub-paragraph (1) shall come into force on a date prescribed by the Commissioner, and shall remain in force until withdrawn by the Commissioner.

[Sub-paragraph (2) substituted by section 7(1)(b) of Act 16 of 2016]

(3)

(a)     The amount to be deducted or withheld in respect of employees’ tax from any lump sum to which paragraph (d), (e) or any amount to which paragraph (eD) of the definition of “gross income” in section 1 or section 7A applies, or any transfers as contemplated in paragraph 2(1)(d) of the Second Schedule, shall be ascertained by the employer from the Commissioner before paying out such lump sum or before such transfers are effected, and the Commissioner’s determination of the amount to be so deducted or withheld shall be final.

[Item (a) substituted by section 7(1) of Act 12 of 2024 effective on 1 September, 2024 and applicable in respect of years of assessment commencing on or after that date]

(b)      . . . . . .

[Sub-paragraph (3) substituted by section 32(b) of Act 103 of 1976 and by section 41 of Act 20 of 2006, amended by section 66(1) of Act 35 of 2007 and by section 68(1) of Act 60 of 2008 and substituted by section 20 of Act 18 of 2009. Item (b) substituted by section 8(a) of Act 23 of 2015 and deleted by section 7(1)(c) of Act 16 of 2016 effective on 1 March, 2017]

(4)     The amount to be deducted or withheld in respect of any amount contemplated in paragraph (eA) of the definition of “gross income” in section 1 of this Act, shall be ascertained by the employer on inquiry from the Commissioner before the date of transfer or conversion of any amount for the benefit or ultimate benefit of any member as contemplated in such paragraph and the Commissioner’s determination of the amount to be so deducted or withheld shall be final.

(5)     The amount to be deducted or withheld in respect of employees’ tax from any amount paid or payable to any director of any private company during any year of assessment of that director, in respect of services rendered or to be rendered by that director to that company, shall be determined after taking into account any amount of employees’ tax paid or payable to the Commissioner by that company during that year of assessment, in respect of that director in terms of paragraph 11C(2).

 

(6)     There must be deducted from the amount to be withheld or deducted by way of employees’ tax as contemplated in paragraph 2 the amount-

(a)     of the medical scheme fees tax credit that applies in respect of that employee in terms of section 6A; and

(b)     where the employee is entitled to a rebate under section 6(2)(b), of the additional medical expenses tax credit that applies in respect of that employee in terms of section 6B(3)(a)(i),

if-

(i)      the employer effects payment of the medical scheme fees as contemplated in section 6A(2)(a); or

(ii)     the employer does not effect payment of the medical scheme fees as contemplated in section 6A(2)(a), at the option of the employer, if proof of payment of those fees has been furnished to the employer.

[Subparagraph (6) inserted by section 95 of Act 24 of 2011 effective on 1 March 2012, substituted by section 8 of Act 23 of 2015 effective on 8 January 2016]

Paragraph 23 (Fourth Schedule) – Provisional tax payments by companies

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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 10 (Fourth Schedule) – Variation of determination of employees’ tax

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10.

 

(1)     If the Commissioner is satisfied that the circumstances warrant a variation of the basis provided in paragraph 9 or 11A(4) for the determination of amounts of employees’ tax to be deducted or withheld from remuneration of employees in the case of any employer, the Commissioner may agree with such employer as to the basis of determination of the said amounts to be applied by that employer, and the amounts to be deducted or withheld by that employer in terms of paragraph 2 shall, subject to the provisions of paragraph 11 and section 95 of the Tax Administration Act, be determined accordingly.

[Subparagraph (1) substituted by section 8 of Act 16 of 2016 and by section 15 of Act 18 of 2023]

 

(2)     Any agreement made in terms of sub–paragraph (1) shall remain in force indefinitely, but the Commissioner or the employer concerned may give notice of termination thereof and upon the expiration of a period of three months from the date of such notice such agreement shall terminate.