Provisional tax is not an extra tax. It is paying your income tax in advance, and underestimating it carries penalties.
Who is a provisional taxpayer
- Every registered company
- Individuals earning income not subject to PAYE, above the threshold
- Sole proprietors and freelancers
- Anyone with significant rental, interest or business income
A salaried employee whose only income is a salary is generally not a provisional taxpayer, because PAYE already does the job.
The payment dates
| Payment | Due | Based on |
|---|---|---|
| First | End of August | Estimate of full year taxable income |
| Second | End of February | Revised estimate of full year |
| Third (optional) | Later in the year | Topping up to avoid interest |
Those dates apply to a February year end. Companies with a different financial year end follow their own cycle.
Why the estimate matters
SARS applies penalties where your second period estimate is too low relative to your actual taxable income. Under-estimating to reduce a payment now creates a larger problem later.
Estimate honestly using actual results to date rather than optimism or wishful thinking.
The practical problem
Provisional tax lands in August and February. Businesses that have not set money aside face a payment they cannot fund, then pay penalties and interest on top.
Treat it like any other monthly cost. Set aside an estimated portion of profit each month rather than finding the full amount twice a year.
If you cannot pay
File the return anyway. Filing and not paying is a smaller problem than not filing at all, and SARS will discuss payment arrangements with taxpayers who are compliant on filing.
Non-payment also affects your tax compliance status, which matters if you tender.
Stop chasing your own numbers
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General information, not tax advice. Thresholds, rates and deadlines change. Confirm current requirements with SARS or a registered tax practitioner before acting.