Who is a Provisional Taxpayer?
Most salary earners are therefore non-provisional taxpayers if they have no other sources of income. It is important to note that receiving exempt income, as follows, does not make you a provisional taxpayer:
Most salary earners are therefore non-provisional taxpayers if they have no other sources of income. It is important to note that receiving exempt income, as follows, does not make you a provisional taxpayer:
- If you receive interest of less than R23 800 if you are under 65; or
- If you receive interest of less than R34 500 if you are 65 and older or;
- You have income in a tax-free savings account.
A provisional taxpayer is defined in paragraph 1 of the Fourth Schedule of the Income Tax Act, No.58 of 1962, as any –
- natural person who derives income, other than remuneration or an allowance or advance as mentioned in section 8(1) or who derives remuneration from an employer who is not registered for employees’ tax,
- A company; or
- A person who is told by the Commissioner that he or she is a provisional taxpayer.
Excluded from being a provisional taxpayer as defined are –
- approved public benefit organisations or recreational clubs that have been approved by the Commissioner in terms of s30 or s30A;
- body corporates, share block companies or certain associations of persons;
- Non-resident owners or charterers of ships or aircraft;
- Any natural person who does not earn any income from carrying on any business, if in that relevant year of assessment –
- your taxable income does not exceed the tax threshold (R99 000 < 65 years old, R153 250 65 to 75 and R171 300 > 75)) or
- The taxable income from interest, dividends, foreign dividends, rental from letting fixed property and remuneration from an employer that is not registered for employees’ tax if it does not exceed R30 000
- A small business funding entity; and
- a deceased estate.
Note: Companies, close corporations and trusts automatically fall into the provisional tax system.
There is no longer a registration or deregistration process to be a provisional taxpayer. The onus is on the taxpayer to determine if he or she is liable for provisional tax, and to request and submit an IRP6 return via efiling. It is important to note that you can be a provisional taxpayer in one year and not the following year if the criteria above are not met. This becomes important because SARS will penalise you for late income tax submission if you don’t submit in accordance with the SARS deadlines that apply to your actual tax circumstances for the current year.