The South African Revenue Service (SARS) requires many individuals and businesses to pay provisional tax if their income isn’t subject to PAYE (Pay As You Earn). This means you estimate your tax liability for the year and pay it in two instalments. This guide focuses on the submission deadline of , covering everything you need to know to ensure compliance.
What is Provisional Tax?
Provisional tax is a system designed to ensure that taxpayers pay their income tax throughout the year rather than in a single large payment at the end of the tax year. This is particularly relevant for:
| Freelancers & Contractors: | Business Owners | Other individuals with income not subject to PAYE: |
| Those with irregular income streams. | Individuals earning income through their businesses. | This could include rental income, investment income etc. in addition to business income. |
The Three Payment Dates:
The tax year runs from 1 March to 28/29 February of the following year. Provisional tax is paid in two instalments:
| The First Period: 31 August | The Second Period: 31 January | The Third Period (voluntary) |
| – Half of the total estimated tax for the full year; – Less the employees tax for this period (6 months); – Less any allowable foreign tax credits for this period (6 months). – Less any applicable rebates or medical tax credits | – The total estimated tax for the full year; – Less the employees tax paid for the full year; – Less any allowable foreign tax credits for the full year; – Less any applicable rebates or medical tax credits; – Less the amount paid for the first provisional period. | – The total estimated tax for the full year; – Less the employees tax paid for the full year; – Less any allowable foreign tax credits for the full year; – Less any applicable rebates or medical tax credits; – Less the amount paid for the 1st and 2nd provisional tax periods. |
Let’s say you estimate your taxable income for the period 1 March 2024 to 31 August 2024 to be R200,000. Assume a simplified tax rate of 20% for this example (actual rates are progressive and depend on your income bracket). Your provisional tax for the 31 August 2025 payment would be R40,000 (R200,000 x 20%). Remember, this is a simplified illustration.
South Africa Provisional Tax Example (Individuals under 65)
| Estimated Taxable Income (ZAR) | Estimated Tax for Year (based on SARS brackets) | First Provisional Payment (≈ 50%) | Second Provisional Payment (≈ 50%) |
|---|---|---|---|
| R200,000 | R36,000 (200,000 × 18%) | R18,000 | R18,000 |
| R400,000 | R72,032 (42,678 + 29,354) | R36,016 | R36,016 |
| R800,000 | R206,874 | R103,437 | R103,437 |
Summary
- Rebates, credits, and PAYE deductions all reduce what you actually owe.
- SARS doesn’t use a single tax rate; they apply progressive brackets to estimate total tax.
- Provisional tax is paid in two installments (August and February), with an optional third to adjust shortfalls.
- The split is typically half the total tax, minus what’s already paid or deducted.
Important Considerations:
| Tax Rebates: | Capital Gains Tax: | Deductions: | SARS eFiling: | Late Payment Penalties: |
| Remember to factor in any tax rebates you are entitled to. | Include any capital gains tax you anticipate paying. | Ensure you consider all allowable deductions to reduce your taxable income. | Use the SARS eFiling portal to submit your provisional tax payments and returns. This is the most efficient method. | Failure to pay provisional tax by the deadline will result in penalties. These penalties can be significant, so prompt payment is essential. |
Need Help?
If you need assistance with calculating your provisional tax or submitting your return, consult our registered tax consultants?