SARS collects a substantial amount of tax through the provisional tax system. This is one of the major ways SARS brings tax into the fiscus before the final assessment is issued. It is therefore not surprising that SARS is likely to place increasing focus on provisional tax estimates, under-estimation penalties, late payments and unsupported calculations.
This is where the danger lies.
Under paragraph 19(3) of the Fourth Schedule, SARS may require a provisional taxpayer to justify the estimate submitted and to provide particulars of income, expenditure and other relevant information. If SARS is not satisfied with the estimate, SARS may increase the estimate to an amount it considers reasonable.
The real sting is this:
If SARS increases the estimate under paragraph 19(3), that increase is not subject to objection or appeal.
