Provisional tax · Guide 4 of 8
Provisional tax made simple: who pays, when, and how not to be penalised.
If any part of your income does not come with a PAYE deduction attached (rental, investments, freelance work, a business), provisional tax is probably part of your life whether you have acknowledged it or not.
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Who is a provisional taxpayer?
- Individuals who receive income from sources other than remuneration above a legislated threshold: rentals, interest and dividends beyond exemptions, freelance or consulting fees, business profits.
- Companies are provisional taxpayers by default (with narrow exceptions).
- Salaried employees whose only income is PAYE-taxed remuneration usually are not, even if SARS's systems sometimes say otherwise.
When are the IRP6 payments due?
- First period: six months into your year of assessment (for a February year-end: end of August).
- Second period: at year-end (for February year-end: end of January), when estimates must be defensible, not hopeful.
- Top-up ("third") payment: roughly seven months after year-end where the second-period estimate fell short of the rules.
Missing a period triggers penalty plus interest automatically; SARS does not need to prove prejudice.
How should you estimate?
The first-period estimate may be a genuine projection. The second period is where most people get hurt: if your taxable income estimate falls below a percentage of actual taxable income (the ratio depends on your income bracket), an underestimation penalty applies to the shortfall. The safe method is unglamorous: build the estimate from real management accounts, bank data and known invoices rather than a feeling, then revisit it before submitting rather than after the penalty arrives.
The quiet advantage
Done properly, provisional tax is not just compliance; it is cash-flow planning. Spreading liability across the year means no single brutal assessment, and accurate estimates mean no surprise top-ups. Done carelessly, it converts into the two most common calls we receive: unexpected penalties years later, and balances that were never allocated against the right periods.
Important
This guide is general information, not tax advice. Thresholds, ratios and dates depend on your facts and change over time; confirm current rules or ask us directly. Regulated submissions and tax-practitioner services are handled through registered partners where required.