Provisional Tax


What is Provisional Tax? 

Provisional Tax is not a separate form of Income Tax.  It is the method of paying your income tax liability in advance to ensure that you don’t have a large tax liability on assessment. 

A third payment is optional after the end of the tax year but before the issuing of the assessment by SARS – 

Provisional Tax is generally paid by individuals who earn non-salary income, for example, from a trade, or small business that you run, rental income, or money from investments. 

In this regard, it can be a very useful tax tool, in that you don’t pay your tax on a monthly basis (like other salary earners), so you keep the money in your bank account and earn interest, but you make provisional tax payments every 6 months, and this avoids a situation where you have to make a big bullet income tax payment on assessment. 

Regular tax-payers make their SARS monthly payment in the form of PAYE (Pay As You Earn) which is automatically deducted from their monthly salary and submitted on their Tax Return once a year at the end of February. 

Who is Exempt? 

  • An individual is exempt if they don’t carry on any business and their taxable income does not exceed the threshold for the tax year. 
  • If the interest from, dividends, foreign dividends, rental from property, and remuneration from an unregistered employer will be R30 000 or less for that tax year. 
  • Deceased estates 
  • Approved public benefit organisations 
  • Body corporates and share block companies. 

Provisional Tax needs to be paid by the end of August and the end of February, with an optional payment at the end of September. 

Some tips to consider. 

  • Estimate your income for the whole year- not 6 months.  The IRP 6 will automatically halve the tax due. 
  • Don’t offset losses, SARS may ringfence the loss and not allow it to be deducted. 
  • Don’t pay late! SARS are very quick to add a late payment penalty equal to 10% for the total tax payable.  SARS will also charge you interest at their prescribed rate (currently 10%) 
  • Don’t submit late, SARS will consider that you have filed a nil return if you are over 4 months late.  This will result in you being charged a 20% penalty for underestimation.  Unless your income was zero. 
  • Submit a nil return if needs be.  This will ensure that you have an unbroken history with SARS. 
  • Make a third top-up payment to avoid interest.  This will help you if you have underestimated your earnings and ward off any nasty surprises. 
  • Don’t forget about investments and capital gains- you want to avoid that underestimation penalty. 
  • Keep all our supporting documents.  

Contact us on, for any of your tax needs. 

Sources – and

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