Why February’s Provisional Tax Deadline is a trap for thousands — and how to avoid penalties
Why February’s Provisional Tax Deadline is a trap for thousands — and how to avoid penalties
Why February’s Provisional Tax Deadline is a trap for thousands — and how to avoid penalties
Gary Oberholzer
Why February’s Provisional Tax Deadline is a trap for thousands — and how to avoid penalties
The second provisional tax deadline on 27 February is fast approaching, and thousands of freelancers, contractors, investors, and small-business owners may be heading toward unexpected SARS penalties. With tighter data-matching systems and a growing shift to automated enforcement, even minor miscalculations or late payments can result in immediate interest and understatement charges.
For those with fluctuating or multi-stream income, the requirement to estimate earnings within 90% of the final taxable amount is particularly challenging. Missing rental income, overlooking a small bonus, or not projecting February earnings accurately can quickly push taxpayers into penalty territory.
Speaking on HOT Business with Jeremy Maggs, powered by Standard Bank, consulting actuary Natasha Huggett-Henchie from NMG Benefits explains why this part of the tax cycle is so often misunderstood — and why SARS is clamping down harder than before.
Huggett-Henchie says the second provisional return functions as a near-final estimate for the year, a detail many taxpayers simply don’t appreciate. If your estimate falls short of 90% of your actual taxable income, penalties apply automatically, even if the difference is later settled.
“People underestimate that this is almost your full and final payment — and SARS gives very little room for error.”
She adds that SARS offers two routes: using its “basic amount” (last year’s income plus 8%) or calculating your own estimate based on careful record-keeping. Either approach demands accuracy, and skipping an income stream remains one of the most common mistakes.
“SARS doesn’t care about your cashflow issues. They want accuracy, and they’re more assertive now than ever.”
Huggett-Henchie stresses that deliberately underestimating income is never defensible, particularly as SARS strengthens its data-matching across banks and investment platforms.
If someone realises they may have under-provided, she advises making a top-up payment immediately. While penalties can’t be reversed, quick action will at least reduce the interest — and with the deadline now days away, time is tight.
Ahmed Kajee
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