Does windfall make investor a provisional taxpayer?Provisional taxpayer
AS I understand it, the first R2 000 in interest earned on investments is tax-free. Does that mean if R2 001 is earned, a taxpayer then becomes a provisional taxpayer?
Two years ago my interest exceeded R2 000 due to the proceeds of a property sale accruing interest, pending the purchase of another property. As a result, the SA revenue Service registered me as a provisional taxpayer.
I explained the situation to them and requested that they delete my name as a provisional taxpayer. Although my interest earned annually does not normally exceed R2 000, I am still regarded as a provisional taxpayer. What action should I take? Are there any moves afoot to increase the interest rebate from the current R2 000 a year?
Sayuri Moodliar, consultant with the KPMG Tax Practice, replies: Any person who receives taxable income (apart from his or her salary) in excess of R1 000 a year has to register as a provisional taxpayer. Taxable income is derived by subtracting the exemptions and allowable deductions from gross income.
If the R2 001 is the only income the taxpayer receives apart from his salary, he does not become a provisional taxpayer as his taxable income for the purposes of provisional tax will be less than R1 000 once he has subtracted the interest exemption of R2 000.
It is not clear whether your request to the Revenue office was in writing. You should write to the SA Revenue Services stating that you are exempt from provisional tax under paragraph 18 (1) (a) of the fourth schedule to the Income Tax Act as your taxable income excluding remuneration does not exceed R1 000 per year.
Note that the Commissioner for Inland Revenue may notify a taxpayer that he is a provisional taxpayer even if he is exempt under the abovementioned paragraph.
If you are registered as a provisional taxpayer, you will not be required to pay provisional tax until your taxable income exceeds R1 000 for the tax period.
The interest exempt from income tax has not been increased in the 1998 Budget. As far as I know, there are no legislative amendments planned in this regard.
WHAT redress does a member of a company's pension fund have if the company, the board of trustees and the registrar of pension funds at the Financial Services Board fail to acknowledge or address a member's problems ?
I would also like to know under what circumstances the following two sections of the Pension Fund Act can be ignored: section 13 which states that the rules of a fund shall be binding on the members, shareholders and officers thereof, and section 40 which states that the rules of a fund (with exceptions) shall be binding on the state.
Finally, my pension is part in SA rands and part in Namibian dollars.
This concerns me, because what will happen should the Namibian dollar delink from the SA rand?
Dave Crawford, an independent financial adviser, replies: On your first question, your best source of redress for the problems you are experiencing would be the recently appointed Pensions Adjudicator. He is Professor John Murphy and he can be contacted on cell number 082 202 3152.
Secondly, sections 13 and 40 of the Pensions Act may never be ignored.
If this is happening the adjudicator is the best authority to deal with the issue.
On the question of the Namibian dollar/SA rand split of your pension, if the currencies do delink, the amount you receive in Namibian dollars will depend on the exchange rate on the pension paid from assets invested in rands. Although it may not be reflected on your advice slip, the fund will know with complete accuracy what part of your pension is Namibian and what is South African. ý We regret no personal correspondence can be entered into. The Sunday Times accepts no responsibility for the advice given in BT Money. Top of page