1. Provisional tax is in respect of the 1st estimate for the 2014 tax year.
2. The notice of assessment for the 2013 tax year of assessment was issued on 15 Aug 2013.
3. The submission date for the IRP6 for the 2014 1st period is 30 Aug 2013.
4. Notice of assessment for the 2012 tax year of assessment was issued on 1 Feb 2013.
EXAMPLE 2
1. Provisional tax is in respect of the 1st estimate for the 2014 tax year.
2. The notice of assessment for the 2013 tax year of assessment was issued on 19 Aug 2013.
3. The submission date for the IRP6 for the 2014 1st period is 30 Aug 2013.
4. Notice of assessment for the 2012 tax year of assessment was issued on 1 Feb 2013.
Example 1
Example 2
Latest preceding year of assessment
Due to the 14 day requirement being met, the latest preceding year of assessment is the 2013 tax year of assessment.
Due to the 14 day requirement not being met, the latest preceding year of assessment is the 2012 tax year of assessment.
Should the basic amount in respect of the 2014 1st period be increased?
·Estimate made more than 18 months after the end of the latest preceding year assessment (i.e. 2013)?
Answer: No
·Estimate in respect of the period that ends more than 1 year after the end of the latest preceding year of assessment (i.e. 2013)
Answer: No
Conclusion:
·Due to both requirements not being met, the basic amount must not be increased.
·Therefore, the 8% increase is not applicable.
·Estimate made more than 18 months after the end of the latest preceding year assessment (i.e. 2012)?
Answer: No
·Estimate in respect of the period that ends more than 1 year after the end of the latest preceding year of assessment (i.e. 2012)
Answer: Yes
Conclusion:
·Due to both requirements not being met, the basic amount must not be increased.
·Therefore, the 8% increase is not applicable.
Assessment issued not less than
14 days prior to submission of provisional tax estimate?
2013 assessment issued 15 days prior to submission of provisional tax estimate.
Answer: Yes
2013 assessment issued 11 days prior to submission of provisional tax estimate.
Answer: No
The Two Tier System
If estimated taxable income is over a R1 million then the basic amount together with any adjustments does not apply as mentioned above and you have to make an estimate of the amount over R1 million and be within 80% of the final income when the tax return is assessed. This means that together with your clients you have to make a reasonable estimate for all taxable income over R1 million rand. This only really becomes a factor when you are calculating the P2 payment as at that point you will have a closer understanding of what the income is likely to be.
In regard to an estimated taxable income that is below R1 million rand you may use the basic amount subject to the amended definition. Using this method you have to be within 90% of the final income if you lower the P2 basic amount. For the rules see above.
