Provisional Tax Submission Rules

A two-tier system with different rules for smaller and larger taxpayers has been introduced:

Tier 1
Applicable to "smaller taxpayers", the old "basic" amount safe-harbour system has been re-introduced. Smaller taxpayers" were defined as taxpayers with a taxable income below R1m. The basic amount is the taxable income reflected in the most recent assessment received from Sars. The tier 1 provisions include the 20% penalty for estimating below the lesser of basic amount and 90% of actual taxable income. However, the basic amount will now include an automatic annual 8% increase.

Tier 2
Applicable to "larger taxpayers", the current requirement of 80% of actual taxable income would be retained but the 20% penalty would be discretionary rather than automatic."This means that Sars will no longer be able to apply an automatic penalty; it will instead be obliged to consider whether or not the taxpayer intended to delay the payment of provisional taxes.