Many South Africans are surprised to find out they owe provisional tax — especially freelancers, contractors, and small business owners. But don’t worry — it’s not an extra tax. It’s simply a way to pay your income tax in advance.
Here’s what you need to know to stay compliant and avoid nasty surprises from SARS.
What Is Provisional Tax?
Provisional tax is a system where taxpayers who don’t earn a regular salary (with PAYE deducted) pay their income tax in two or three instalments during the year, rather than one lump sum at year-end.
It helps SARS collect revenue throughout the year — and helps you manage your cash flow.
Who Needs to Pay Provisional Tax?
- You’re likely a provisional taxpayer if you:
- Earn income from self-employment, freelancing, or consulting.
- Run a small business or have rental income.
- Receive income that’s not already taxed via PAYE.
- If your only income is from a salary (and PAYE is deducted), you’re not a provisional taxpayer.
When Are Payments Due?
There are usually two compulsory payments and one optional top-up:
- First payment: by end of August (mid-tax year)
- Second payment: by end of February (end of tax year)
- Third/top-up payment: by end of September (only if needed to avoid interest)
How to Calculate Provisional Tax
You’ll estimate your taxable income for the year, subtract allowable deductions (like business expenses, retirement contributions), and calculate the tax due based on SARS tables.
Your accountant can help ensure your estimate is realistic — underestimating can lead to penalties.
How to Pay your Provisional Tax
- Register for SARS eFiling or use the SARS MobiApp.
- Complete your IRP6 return.
- Pay directly via eFiling, EFT, or at an authorised bank.
What Happens If You Don’t Pay?
- Late or underpaid provisional tax attracts:
- Penalties (10% of the unpaid amount).
- Interest on the outstanding balance.
- Missing multiple deadlines can flag your tax account for review.
Final Thoughts: What is Provisional Tax
Provisional tax doesn’t have to be confusing — it’s just a way to stay on top of your tax obligations throughout the year.
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Frequently Asked Questions
What is provisional tax in simple terms?
Provisional tax is not an extra tax — it is a way to pay your income tax in instalments throughout the year instead of a single lump sum after year-end. It applies mainly to people who earn income without PAYE being deducted, such as freelancers and business owners.
Who needs to register for provisional tax?
Anyone earning income from which no PAYE is deducted must register as a provisional taxpayer. This includes freelancers, independent contractors, sole proprietors, directors of companies, and people earning rental or investment income.
How is provisional tax calculated?
You estimate your total taxable income for the year and pay tax on that estimate in two instalments. The first payment (six months into the year) uses a reasonable estimate. The second payment (by year-end) adjusts for actual income. SARS then reconciles everything when you file your annual return.
When are provisional tax payments due?
For individuals, the first payment is due by 31 August and the second by the last day of February (end of the tax year). A third voluntary payment can be made within six months after year-end to reduce interest if your earlier estimates were too low.
What happens if I underestimate my provisional tax?
If your estimates are too low, SARS charges interest on the shortfall from the original due date. However, there is a safe harbour rule: if your first payment is at least 90% of the actual tax, no penalty or interest applies on that instalment.
Schoemans Chartered Accountants, we help individuals and business owners across Cape Town calculate, file, and manage their provisional tax — accurately and on time.
Need help with your IRP6 return? Speak to our tax team today. Schoemans Charted Accountants in Cape Town are part of the Schoemans Group that included Schoemans & Coetzee Audit – Registered Auditors in Cape Town and Acredo Quality Auditing, Accounting and Tax Compliance