“Today, it takes more brains and effort to make out the income tax form than it does to make the income.” (Alfred E. Neuman, Mad Magazine Mascot)
Provisional tax is among the most confusing aspects of the tax regime – and it’s also the most heavily penalised. There are numerous declarations and payments overlapping throughout each year, not to mention a raft of rules and exceptions.
The next provisional tax deadline for the 2026 tax year (coming up on 27 February 2026) is also the trickiest and most important provisional tax deadline of the year. This is because the income estimates declared must be highly accurate. A stiff 20% under-estimation penalty can apply if the declared income estimate doesn’t fall within 80–90% of the actual taxable income.
Our professional assistance is your ticket to avoiding non-compliance and stiff penalties.
Must you pay provisional tax?
- Companies are automatically provisional taxpayers.
- Individuals who receive income other than a salary may also be provisional taxpayers, depending on various criteria. This includes sole proprietors and may include members of CCs and company shareholders / directors that earn income not fully subject to PAYE. SARS places the onus on you to determine if you are liable for provisional tax, so it’s best to check your status with us if in any doubt.
- Other taxpayers include trusts and any person notified by the SARS Commissioner. Exceptions and thresholds apply in every instance, so be sure to verify with our team of tax professionals.
What is provisional tax?
Provisional tax is not a type of tax, but rather a way of paying an annual income tax liability in two or three payments during a tax year. This prevents taxpayers from facing one large tax bill at year-end when the annual personal income tax (PIT) return or corporate income tax (CIT) return is filed.
Making provisional tax payments allows you to spread the tax liability across the year. But it also creates additional administrative obligations (calculations, returns), and increases the risk of penalties – particularly under-estimation penalties.
Three provisional tax payments each year
The following rules apply to individuals and to companies / trusts with a year of assessment running from 1 March to 28 February:
- First payment: Due within six months of the start of the year of assessment. For the 2026 year (which commenced on 1 March 2025), this was due end August 2025. This forward-looking payment is based on half of the total estimated tax for the full year, less employees’ tax already paid and any applicable tax credits and rebates.
- Second payment (due 27 February 2026): This is retrospective and based on the total estimated tax for the full tax year, less provisional tax and employees’ tax already paid in the first period, and any applicable tax credits and rebates. The rules are far stricter with harsh penalties for under-estimating.
- Third payment (optional): Can be made after the end of the tax year but before the issuing of the annual income tax assessment by SARS each year, typically by 30 September.
Bear in mind that SARS can ask for your estimate to be justified, so you’ll need accurate records of all source documents and calculations used. SARS can even increase the estimate if they’re dissatisfied with your amount, and this is not subject to objection or appeal.
Further penalties to watch out for
- Late filing: If an IRP6 is filed more than four months after the deadline, SARS will consider a ‘nil’ return to have been submitted. Unless actual taxable income really was zero, an under-estimation penalty will also apply.
- Interest charges: Interest will be levied on underpayment of provisional tax resulting from under-estimation.
- Late payment penalty: Not making provisional tax payments on time will result in an immediate 10% penalty, regardless of whether it’s not paid at all or simply paid late.
Rely on our expert assistance
The rules of provisional tax are daunting and confusing, yet SARS holds provisional taxpayers responsible for their tax affairs.
SARS recommends that the provisional tax estimate is determined sensibly and by careful reasoning and judgement, in a mathematical manner, and using experience, common sense and all available information.
Our professional assistance is invaluable as you prepare and review your provisional tax and income tax returns prior to submission. We proactively take care of all necessary steps to correctly calculate estimated taxable income and submit timeously – in the process saving you time, money, and hassle.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.
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