Did you know you can improve your cash flow by delaying the payment of provisional tax?

Did you know that business rescue proceedings can be used as a strategic tool in these challenging financial times?
April 16, 2020
PAYE payments during the COVID-19 and Lockdown period.
April 16, 2020

Did you know you can improve your cash flow by delaying the payment of provisional tax?

A further tax relief measure has been introduced by government as a result of the COVID-19 pandemic and the national lockdown. This relief measure entails that tax compliant businesses with an annual turnover of R100 million or less will be allowed to delay the payment of a portion of their first and second provisional corporate income tax payments without penalties or interest over the next twelve months (01 April 2020 – 31 March 2021), without SARS levying penalties or interest on the deferred amount.

This deferral process allows for qualifying taxpayers to pay –

  • 15% (as opposed to the normal 50%) of the total estimated tax liability for the first provisional tax period (01 April 2020 – 30 September 2020);
  • 65% (including the first 15% paid for the first provisional tax period) of the total estimated tax liability in respect of the second provisional tax period (01 April 2020 – 31 March 2021); and
  • the remainder of the full tax liability (i.e. 35% of the total estimated tax liability) in respect of the third provisional tax period.

There will be no penalties or interest levied on the deferred amount, provided that the full tax liability is settled with the third provisional payment. The payment due on 31 March 2021 must therefore be made in full.

These provisions came into effect on 1 April 2020 and will apply to the first provisional tax periods ending on or after 1 April 2020, but before 1 October 2020, and to the second provisional tax periods ending on or after 1 April 2020 but before 1 April 2021.

Requirements to qualify for this tax relief measure are as follows:

  • The business must be tax compliant and must have been registered with SARS by 1 March 2020.
  • The tax relief will be available to only to small and medium sized businesses. These categories have been classified as businesses with an annual turnover not exceeding R100 million per annum.

Details regarding communications with SARS during the lockdown period are available on their website at www.sars.gov.za. You may also consult the Frequently Asked Questions on Tax Measures section relating to Tax Measures for Employees’ Tax, ETI and Provisional Tax available on the SARS website for further information.

For the moment, this is the information we have obtained. We will keep you updated should any further relevant information come to our attention.

Stay safe during this time and look out for further advisory updates from us.

Do you want to get the best tax benefit from you B-BBEE and skills development spend? Let us set up a bespoke B-BBEE and skills development solution for your business. We can help you maximise your skills development and B-BBEE benefit, and put money back in your pocket through careful planning and implementation.

Contact your regional Training Portal representative to set-up an online meeting:

Sandton – Jean Du Plessis | jean@trainingportal.co.za | 074 453 3004

Bloemfontein – Danie Krige | danie@trainingportal.co.za |071 688 1656

Cape Town – Tobie van der Merwe | tobie@trainingportal.co.za | 079 690 5454

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