According to tax legislation and the South African Revenue Service (SARS), directors of private companies and members of close corporations are not automatically deemed to be provisional taxpayers.
The following natural persons (which will include directors and members) are deemed to be provisional taxpayers and must therefore submit an IRP6 return and pay provisional tax on or before the applicable due dates:
- Any natural person who earns income which does not constitute remuneration or an allowance or advance as contemplated by the Income Tax Act, (except if one or more of the exemptions provided below is applicable);
- Any natural person who is specifically notified by SARS that he or she is a provisional taxpayer even if he or she would otherwise be exempt from being a provisional taxpayer.
The first category above would generally include natural persons who have their own businesses, partners in partnerships who earn profit-share, and natural persons who do not carry on a business but earn taxable investment income exceeding a certain threshold for the tax year.
The following natural persons are exempt from the payment of provisional tax (except in circumstances where SARS has specifically advised them otherwise):
- Any natural person whose income is derived solely from remuneration
- Any natural person who:
- Does not derive any income from the carrying on of any business;
- Whose taxable income does not exceed the applicable annual tax threshold; or
- Whose taxable income for the relevant year (which is derived solely from interest, foreign dividends, and rental from the letting of fixed property) will not exceed R30 000.
Tax thresholds for the 2017 tax year:
|Below age 65||R 75 000|
|Age 65 to below 75||R116 150|
|Age 75 and over||R129 850|
Therefore, if a director of a company or member of a close corporation earns income which does not constitute remuneration, an allowance or and advance as per the Income Tax Act and if none of the exemptions apply or if he or she was specifically informed by SARS that he or she is deemed to be a provisional taxpayer (even if he or she would otherwise not be deemed to be one), the director is liable to submit an IRP6 and pay provisional tax.
If you believe that you are not liable to submit a provisional tax form (IRP6) or pay provisional tax, in light of the above explanation, you can request a declaration from FHBC where you state the same. Upon completion of said declaration by yourself, FHBC will then cease to submit IRP6 forms or to organise provisional tax payments on your behalf, until such time that you notify us otherwise.
If you have any queries, please contact Petri Westraadt at email@example.com