Provisional tax

What is it?

Provisional tax is not a separate tax. It is merely a system that requires taxpayers to provide for their final tax liability, in advance, by paying at least two amounts in the course of the year of assessment, which are based on estimated taxable income. Final liability, however, is determined upon assessment.
The aim is to help taxpayers meet their liabilities in the form of two payments, instead of in the form of a single, large sum on assessment. A third payment after the end of the tax year, but prior to the issuing of the assessment, is optional.

Who is it for?

Any person who receives income (or to whom income accrues) other than remuneration is a provisional taxpayer. Examples include rental income, interest income or other income from the carrying on of any trade. If you receive this type of income (or should that income accrue to you), you will always be a provisional taxpayer.
Companies automatically fall into the provisional tax system. The Commissioner may also notify any person that they are a provisional taxpayer.

What steps must I take to determine the amounts due?

The amount of tax payable is determined on the estimated taxable income for that particular year of assessment, as follows:
  • The First Period:
    • Half of the total estimated tax for the full year;
    • Less the employees tax deducted for this period (6 months);
    • Less any allowable foreign tax credits for this period (6 months).
  • The Second Period:
    • The total estimated tax for the full year;
    • Less the employees tax paid for the full year;
    • Less any allowable foreign tax credits for the full year;
    • Less the amount paid for the first period.
  • The Third Period (voluntary):
    • The total tax estimated payable for the full year;
    • Less the employees tax paid for the full year;
    • Less any allowable foreign tax credits for the full year;
    • Less the amount paid for the 1st and 2nd provisional tax periods.

How should it be paid?

SARS has introduced changes to provisional tax which affect the way in which provisional taxpayers file their IRP6 returns. With most provisional taxpayers making their submissions electronically, SARS will no longer mail IRP6 returns to provisional taxpayers. You will now be required to request your IRP6 using one of the methods below:
  • Register for SARS eFiling. The eFiling facility allows you to request your IRP6 return and make your submission and payments online, and ensures fast turnaround times for assessment and refund payments.
  • If you are already an eFiler, simply add provisional tax to your profile so that you can access and file your IRP6 return online.
  • Call the SARS Contact Centre on 0800 00 SARS (7277) to request an IRP6 return or find out more about the new Provisional Tax process.
  • Visit the SARS branch nearest you where our staff will help you to complete and submit your IRP6 electronically.

When should it be paid?

  • The first provisional tax payment must be made within six months of the beginning of the year of assessment.
  • The second payment must be made no later than the last working day of the year of assessment.
  • The third payment is voluntary and may be made:
    • within seven months of the year of assessment, where the year of assessment ends in February, and
    • within six months of the year of assessment, in any other case.
Remember by making your submission on time, you can ensure a hassle-free, smooth submission.

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