BBO Consulting

What is provisional tax in South Africa?

I was recently contacted by a new client in a panic, who was gobsmacked to hearing that she suddenly became a provisional tax payer with South African Revenue Services (SARS). My client, like most individuals, was ordinarily submitting her annual tax return when she received a notification from SARS stating that she is now a provisional taxpayer in the last tax year.

How did this happen you may ask and how did my client suddenly become a provisional taxpayer? Turns out my client had invested some monies into a fixed deposit and was earning interest which no income tax is deducted/withheld during the period. Thus, she was required to submit provisional tax returns via SARS eFiling for the period.



What is provisional tax?

Provisional tax is not a separate tax to income tax. It is a method of paying your income tax liability in advance to avoid a large tax debt on assessment. You are required to estimate your taxable income for the tax year and spread your provisional tax liability over the tax year in at least two payments.

  1. First provisional tax payment

  2. Second provisional tax payment

  3. Third provisional tax payment (voluntary)


If you have short-paid by the end of February, then you can make a voluntary top-up payment prior to 1 October. After this point, SARS is allowed to start charging interest on taxes due.

Thus, every year you will be required to submit your annual tax return (ITR12), as well as two/three provisional tax (IRP6) returns via SARS eFiling each year.

Failure to submit your provisional tax (IRP6) returns will result in penalties being charged.

When do you become a provisional tax payer?

Provisional tax payers are people who earn income other than a salary/remuneration on which no income tax has been deducted/withheld. Thus, for example, rental income from a property, interest income from investments or other income from a trade or small business you run, you will be a provisional taxpayer.

Companies automatically fall into the provisional tax system.

Whether you are an individual or run a Company you always want to ensure you are tax compliant. Thus, it is important to know where you stand when it comes to keeping your taxes up to date. If you are a business owner and growing your business, as you land bigger and better customers and start attracting top notch employees, you will need proof that your business is tax compliant.

It is much easier (and far cheaper) to get the right foundations in place now, than to try and fix things down the line. You also do not want to fall on the wrong side of SARS because you didn’t know what you should (and shouldn’t) be doing.


Want to understand where you and your business stands?

If you want to understand whether you are a provisional tax payer, or need assistance to calculate your provisional tax or to complete your provisional tax returns contact BBO Consulting. We would love to act as your tax consultant and advise you as to where you stand, and what steps are necessary to become tax compliant.


We offer a free first consultation to understand where you stand as well as mapping out the next steps to submit your provisional tax return, as well as what is needed to remain tax compliant.


Contact me here if you have any questions.