A clear guide for freelancers, sole proprietors, companies, and taxpayers with extra income streams.
Provisional tax is not a separate tax. Instead, it is a system introduced by SARS that allows taxpayers to pay their estimated income tax in advance, rather than settling the full amount in one payment after the end of the tax year.
Think of provisional tax as paying your annual income tax in instalments.
By making two (and sometimes three) payments during the year, taxpayers avoid receiving a large tax bill when they submit their annual income tax return.
Most people earning only a salary do not need to pay provisional tax because their employer deducts Pay-As-You-Earn (PAYE).
However, you are generally a provisional taxpayer if you earn income that is not subject to PAYE, including:
Companies are generally provisional taxpayers, regardless of whether they make a profit.
Generally, you are not a provisional taxpayer if:
If you receive both a salary and additional income (such as rental or freelance income), you may still be required to register as a provisional taxpayer.
There are normally two compulsory provisional tax payments each year.
Due six months into your year of assessment (e.g., end of August for individual taxpayers). The payment is based on an estimate of your total taxable income for the full tax year.
Due on or before the last day of your year of assessment (e.g., end of February for individual taxpayers). This estimate should be as accurate as possible because SARS may impose penalties if taxable income is significantly underestimated.
An optional "top-up" payment may be made after year-end to reduce interest where additional tax is still payable.
| Payment | Due Date | Description |
|---|---|---|
| First IRP6 | Six months into the tax year | First compulsory instalment based on full-year estimate |
| Second IRP6 | Last day of the tax year | Second compulsory instalment updating original estimate |
| Third IRP6 (Optional) | Within prescribed period after year-end | Optional top-up to avoid interest on tax liability |
Always check the applicable SARS deadlines for your specific year of assessment or financial year-end.
The calculation follows these basic steps:
Because the calculation depends on your expected taxable income, it should be reviewed whenever your income changes significantly during the year.
Sarah operates a small marketing consultancy.
She estimates that for the current tax year she will earn:
Estimated taxable income: R600,000
She calculates her estimated annual income tax on R600,000 and pays it in two instalments through her IRP6 provisional tax returns rather than waiting until the end of the tax year.
One of the most common mistakes is underestimating taxable income on the second provisional return. If your estimate is too low relative to your final actual income, SARS may impose:
For this reason, it is important to use realistic estimates supported by up-to-date accounting records.
Business owners frequently:
No. It is simply a method of paying your normal income tax during the year in advance.
Usually not, unless they earn additional taxable income (like freelance fees or rental income) that requires them to register as provisional taxpayers.
Yes. Companies are generally provisional taxpayers and submit provisional tax returns during their financial year.
Yes. You may make an additional voluntary top-up payment after year-end if necessary to reduce interest on outstanding tax.
Yes. Provisional taxpayers must still submit their annual income tax return (ITR12 / ITR14) after the end of the tax year. The provisional payments made during the year are credited against the final tax assessment.
Preparing accurate provisional tax estimates can save you money by avoiding penalties and interest. BML Accounting & Tax assists individuals, freelancers, companies and small businesses across South Africa with:
