Confusion over January tax deadline – what you need to know

 ·19 Jan 2023

The South African Revenue Service’s provisional tax deadline of 23 January 2023 is causing confusion among taxpayers, who think that their second provisional tax submission is due sooner this year.

However, this deadline is for provisional taxpayers’ annual income tax that is due on 23 January instead of 30 January – seven days earlier than normal, says Tax Consulting SA.

The second provisional tax submission and payment is still due on or before the last business day of February 2023.

“The close relationship between annual income tax and provisional tax makes this kind of misunderstanding easy, especially if such announcements are not carefully worded,” the group said.

Provisional vs Annual income tax

According to Tax Consulting SA, non-provisional taxpayers should have already submitted their annual income tax between 1 July 2022 and 24 October 2022.

These taxpayers would have declared their annual employment income after having earned it in the previous tax year, that is, between 1 March 2021 and 28 February 2022.

A provisional taxpayer, on the other hand, is any person who receives income other than remuneration. Most salary earners are, therefore, not-provisional taxpayers, if they have no other sources of income.

According to the definition in the Income Tax Act, a provisional taxpayer is defined  as any:

  • Natural person who derives income, other than remuneration or an allowance or advance or who derives remuneration from an employer who is not registered for employees’ tax (for example, an embassy is not obligated to register as an employer for employees’ tax purposes)
  • Company; or
  • Person who is told by the commissioner that he or she is a provisional taxpayer.

Excluded from being a provisional taxpayer as defined are any –

  • 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 that are exempt from tax;
  • Non-resident owner or charterer of ships or aircraft;
  • Natural person who does not earn any income from carrying on any business – provided that person’s taxable income will not be more than the tax threshold;
  • A small business funding entity;
  • A deceased estate.
  • Any association that has been approved by the commissioner

Unlike employment-only taxpayers, provisional taxpayers are given more time to reconcile and declare their total personal income from both employment and non-employment sources, Tax Consulting said.

Provisional taxpayers have from 1 July 2022 until 23 January 2023 to submit their annual tax returns and pay tax on all income earned between 1 March 2021 and 28 February 2022.

A second tax – misunderstanding

Provisional tax is not a separate tax but forms part of the taxpayer’s personal income tax obligation, Tax Consulting said.

“This is where things get tricky. While personal income tax is declared in respect of the preceding tax year, provisional tax is declared in the current tax year in which the non-employment income is earned,” it said.

Provisional taxpayers declare their full income twice each year:

  • The first provisional submission is made before 31 August;
  • The second provisional submission is before the end of February in the following calendar year.

“The payments on these first and second submissions are then consolidated into the provisional taxpayer’s eventual declaration of their total personal income within the annual submission,” the group said.

This means that, for the 2022/23 tax year, provisional taxpayers should have made their first declaration of their income by 30 August 2022 and will make their second declaration on or before 28 February 2023.

Their payment of the tax on that income will then be deducted from the tax calculated on the total personal income they declare in January 2024.

“The relationship between annual income tax and provisional income tax can make it confusing to separate the two systems due to this not being a separate tax but rather a payment processing tool,” Tax Consulting said.

“To reiterate, it is the provisional taxpayer’s annual income tax – not their second provisional tax submission – that is due by 23 January 2023. Provisional taxpayers can breathe a sigh of relief, knowing that they will be under no more pressure than usual to meet their provisional tax obligation,” Tax Consulting said.

Read: January tax deadline warning for South Africans

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