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

Paragraph 20

 

  1. Heading of paragraph 20 substituted by section 271 of Act 28 of 2011 effective on 1 October 2012.

 

  1. Item (1)(a) substituted by section 271 of Act 28 of 2011 effective on 1 October 2012 and section 23 of Act 21 of 2012 effective on 20 December 2012.

 

  1. Item (1)(b) substituted by section 23 of Act 21 of 2012 effective on 20 December 2012.

 

  1. Proviso to subparagraph (1) inserted by section 23 of Act 21 of 2012 effective on 20 December 2012.

 

  1. Subparagraph (1) amended by section 25 of Act 72 of 1963, substituted by section 29 of Act 88 of 1965, section 47 of Act 89 of 1969, section 44 of Act 88 of 1971 and section 51 of Act 85 of 1974, amended by section 36 of Act 69 of 1975, section 50 of Act 94 of 1983 and section 39 of Act 121 of 1984 and substituted by section 19 of Act 61 of 2008, section 24 of Act 18 of 2009, section 271 of Act 28 of 2011 effective on 1 October 2012.

 

  1. Subparagraph (1A) inserted by section 47 of Act 89 of 1969 and deleted by section 51 of Act 85 of 1974.

 

  1. Subparagraph (2) substituted by section 51 of Act 85 of 1974, section 24 of Act 18 of 2009, section 271 of Act 28 of 2011 effective on 1 October 2012 and section 23 of Act 21 of 2012 effective on 20 December 2012.

 

  1. Subparagraph (3) substituted by section 51 of Act 85 of 1974.

 

  1. Subparagraph (4) substituted by section 24 of Act 18 of 2009 and deleted by section 271 of Act 28 of 2011 effective on 1 October 2012.

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]