Provisional tax:
what you need to know
If you’re a provisional taxpayer with a February year-end – either as an individual, trust or company – you’ll need to make your second provisional tax payment before the end of the month. It’s crucial that you calculate the amount to be paid accurately – here’s what you need to know.
For provisional taxpayers, two provisional tax payments are required during any period of assessment – the first in August and the second in February. This means that by 28 February 2022, you should have made all the necessary provisional payments towards your tax liabilities for the 2022 tax year.
Provisional tax is paid in advance, in anticipation of the taxpayer’s final liability, to reduce this liability and to avoid the payment of additional interest and penalties on assessment. In terms of Paragraph 20 of the Fourth Schedule to the Income Tax Act 1962, a penalty and interest will be levied on the underestimation of income, and the resulting underpayment of provisional tax. It’s therefore crucial that an accurate calculation is done in respect of the second provisional tax payment.
When calculating your provisional tax payment, consider the following:
The BHP Group recently decided to simplify its current holding structure by unifying its two parent companies (BHP Group Plc and BHP Group Limited) into one company (BHP Group Limited), with effect from 28 January 2022. The transaction resulted in a disposal, at current market value, of all BHP Group Plc shares in exchange for BHP Group Limited shares.
If you held BHP Group Plc shares, any resulting capital gain should be included when calculating the second provisional tax payment for the 2022 tax period. While this information will be available on the final 2022 Sanlam Private Wealth tax reporting, it won’t reflect on the interim tax reporting currently available. Please contact your portfolio manager to confirm any capital gain should you require this information when calculating your second provisional payment.
You can read more about the BHP unification here.
At Sanlam Private Wealth, we provide enhanced tax compliance and accounting services to high net worth and ultra-high net worth clients – both individuals and trusts. For further information, contact Rene Klein on +27 (0)11 778 6662 or at renek@privatewealth.sanlam.co.za.
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INVESTMENT PORTFOLIOS
Participation in Sanlam Private Wealth Portfolios is a medium to long-term investment. The value of portfolios is subject to fluctuation and past performance is not a guide to future performance. Calculations are based on a lump sum investment with gross income reinvested on the ex-dividend date. The net of fee calculation assumes a 1.15% annual management charge and total trading costs of 1% (both inclusive of VAT) on the actual portfolio turnover. Actual investment performance will differ based on the fees applicable, the actual investment date and the date of reinvestment of income. A schedule of fees and maximum commissions is available upon request.
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The Sanlam Group is a full member of the Association for Savings and Investment SA. Collective investment schemes are generally medium to long-term investments. Past performance is not a guide to future performance, and the value of investments / units / unit trusts may go down as well as up. A schedule of fees and charges and maximum commissions is available on request from the manager, Sanlam Collective Investments (RF) Pty Ltd, a registered and approved manager in collective investment schemes in securities (‘Manager’).
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