We are approaching the year’s end we have only left with a few days to close the year. As a taxpayer, there is an important thing to remember and perform before the year’s end so you may enjoy your holy day season well and happily.

Section 89 of the Income Tax Act of 2004 requires a taxpayer whether an entity or an individual to file a statement of estimated tax payable within the first quarter of the year of income. For those entities or individuals with a year of income ending 31 December, it is important to review the financial records and examine if there is any deviation from the income estimated at the beginning of the year.

If the income estimated from the beginning is lower than the actual income generated to the close of the year then the taxpayer should do an increasing adjustment so as to report the correct income for the year. If the income estimated is higher than the actual income generated then the taxpayer should do a decreasing adjustment to report the correct income for the period.

Failure to report the correct income after the end of the year will lead to penalization for underestimation of income for the year. Section 75(3) of the Tax Administration Act of 2015 explains a situation under which a taxpayer has an underestimation of income, the section states “This section applies where an installment payer’s estimate or revised estimate of income tax payable for a year of income under section 88 of the Income Tax Act is less than eighty percent of the correct amount.”

As you plan for enjoying the holiday season also plan to make well your tax affairs by planning to revise the statement of estimated tax to avoid unnecessary tax liability that can be avoided beforehand.