Provisional Tax in South Africa: Who Needs to Pay and How to File

By / September 18, 2025

Provisional tax can feel intimidating the first time you encounter it, but it is simply a pay-as-you-go system that helps […]

Provisional Tax in South Africa Who Needs to Pay and How to File

Provisional tax can feel intimidating the first time you encounter it, but it is simply a pay-as-you-go system that helps taxpayers who do not pay PAYE during the year to keep up with their income tax. This guide explains who counts as a provisional taxpayer, when payments are due, how to estimate correctly, the penalties to avoid, and step-by-step filing on SARS eFiling. It is written for South Africans with British English and plain-language clarity in mind.

What is provisional tax?

Provisional tax is not a separate tax. It is a mechanism to spread your normal income tax liability across the year in one or more instalments. SARS uses your IRP6 provisional returns to collect amounts based on your estimated taxable income for the current tax year. When you later submit your final income tax return (ITR12 for individuals, ITR14 for companies), SARS performs the final calculation, credits the amounts you have already paid, and then issues a refund or requests a top-up if required.

Key principles to keep in mind:

  • You estimate your taxable income for the year of assessment and SARS calculates tax on that estimate.
  • PAYE already withheld by an employer and certain credits are deducted from what you must pay on IRP6.
  • A third, voluntary top-up payment after year-end can reduce or eliminate interest if your earlier estimates were low.

Who needs to pay provisional tax?

You are a provisional taxpayer if any of the following apply

  • You earn income that is not “remuneration” (that is, income on which no PAYE is withheld) — for example, business or freelance income, rental income, interest and investment income above certain thresholds, or side-hustle consulting.
  • You earn remuneration from an employer that is not registered for PAYE in South Africa (for example, certain foreign missions).
  • You are a company (all companies are provisional taxpayers by default).
  • SARS has notified you that you are a provisional taxpayer.

Directors of private companies and members of close corporations are not automatically provisional taxpayers purely by virtue of their office; what matters is whether they have income that meets the definition above.

You are not a provisional taxpayer if

You are an individual who does not carry on a business, and either:

  • Your taxable income for the year is below the tax threshold for your age band; or
  • Your total taxable income from interest, dividends, foreign dividends, rental from letting fixed property, and remuneration from an unregistered employer will be R30 000 or less for the year.

In addition, deceased estates are excluded from being provisional taxpayers.

Practical examples

  • A salaried employee with one employer that deducts PAYE and no other income sources is not a provisional taxpayer.
  • A salaried employee with a small side-business that makes a profit is a provisional taxpayer, regardless of PAYE on the salary.
  • A retiree with interest income above the exemption and over R30 000 of passive income becomes a provisional taxpayer, even with no trade or business.

When are provisional tax payments due?

The South African individual tax year runs from 1 March to 28/29 February. Provisional tax is typically paid in two compulsory periods, with an optional third top-up:

PeriodWhat it coversTypical due date (Feb year-end)What you pay
1st period (IRP6)First six months of the tax year31 AugustHalf of the total tax on your current year estimate, less allowable credits
2nd period (IRP6)Full tax year to year-endLast day of FebruaryThe balance of tax for the year on your updated estimate, less the first payment and credits
3rd (optional) top-upAfter year-endBy 30 September (7 months after a Feb year-end)Any voluntary top-up to reduce or avoid interest if underestimated

For entities with non-February year-ends, the first payment is six months after the start of the financial year, the second on the last day of that year, and the voluntary top-up is six months after year-end.

Estimating correctly: the “basic amount”, capital gains and safe harbours

Your estimate must be realistic

For each period you must submit a reasonable estimate of your total taxable income for the year. SARS may ask you to justify your estimate and may increase it if dissatisfied. The estimate must exclude retirement lump sums and severance benefits, but it must include the taxable portion of any capital gains you expect for the year.

The “basic amount”

SARS uses a concept called the basic amount to set a floor for estimates:

  • It is your last assessed taxable income (from the most recent assessment issued at least 14 days before you submit the IRP6), less any taxable capital gain and certain once-off lump sums.
  • If that last assessment is older than 18 months relative to the estimate, SARS increases the basic amount by 8% per year.

While the Commissioner may accept an estimate lower than the basic amount in appropriate cases, the general rule is that your estimate should not be lower than the basic amount unless you can justify it (for example, a materially weaker trading year).

The underestimation penalty rules at a glance

Underestimation penalties apply at the second period (year-end) if your estimate is too low:

  • If your taxable income is R1 million or less: a 20% penalty may be imposed only if your second estimate is less than 90% of actual taxable income and less than the basic amount.
  • If your taxable income exceeds R1 million: a 20% penalty may be imposed if your second estimate is less than 80% of actual taxable income.

These percentage tests are applied to taxable income, and the penalty is calculated on the tax shortfall after allowable credits.

Late payment penalty and interest

  • A 10% penalty applies to late payment of the first and second provisional amounts.
  • Interest (section 89quat) may run from an “effective date” after year-end (for February year-ends, generally 7 months after year-end) if your total paid is less than the assessed amount. Making a third top-up by the effective date reduces or eliminates this interest.

Step-by-step: How to file your provisional tax (IRP6) on SARS eFiling

  1. Sign in to eFiling
    Use your SARS eFiling profile. If you are new to provisional tax as an individual, there is usually no separate formal registration step; simply add the Provisional Tax (IRP6) tax type to your profile.
  2. Open the IRP6 for the correct period
    Under “Returns Issued” > “Provisional Tax (IRP6)”, select the relevant tax year, then choose Period 01 (first six months) or Period 02 (year-end). For companies, follow the same pattern for your financial year-end.
  3. Enter your estimated taxable income
    • Base your figure on year-to-date results plus a realistic forecast for the remainder of the year.
    • Exclude retirement fund lump sums and severance benefits.
    • Include the taxable portion of any capital gain you expect to realise during the year.
    • If your last assessment is older than 18 months, remember SARS may apply the 8% uplift to your basic amount.
  4. Review the automatic tax calculation
    eFiling applies the current year’s individual or company tax tables to your estimate to calculate normal tax and rebates.
  5. Capture allowable credits
    Enter PAYE withheld (if any), foreign tax credits (where applicable), and your first provisional payment when completing Period 02. These reduce what is payable now.
  6. Submit and make payment
    Submit the IRP6 and pay securely through eFiling’s payment options. Payment must clear by the due date to avoid the 10% late payment penalty.
  7. Consider a third top-up
    After year-end, when you have a clearer view of actual taxable income, pay a voluntary top-up before the effective date (for February year-ends, by 30 September) to minimise section 89quat interest.
  8. File your annual return
    Submit your ITR12 (individuals and trusts) or ITR14 (companies). SARS will compare your assessed tax to amounts paid on IRP6 and issue a refund or a notice to pay a shortfall.

Worked examples

Disclaimer: These examples illustrate mechanics using the 2025/26 individual tax tables and rebates. They assume an individual under 65 with no PAYE credits and no medical or other additional credits. Your own figures will differ.

Example 1: Individual with R500 000 taxable income

  • Estimated taxable income for the year: R500 000
  • Normal tax (per 2025/26 tables): R115 692
  • Less primary rebate: R18 063
  • Estimated net normal tax: R97 629

Period 1 (31 August): Pay about R48 815 (half of R97 629).
Period 2 (28/29 February): Update your estimate. If it remains R500 000 and you had no PAYE, pay the balance of R48 814.
Optional top-up (by 30 September): If actual taxable income ends up higher than R500 000, make a voluntary top-up to limit interest.

Example 2: Individual with R2 500 000 taxable income and the 80% rule

  • Estimated taxable income for the year: R2 500 000
  • Normal tax (per 2025/26 tables): R945 685
  • Less primary rebate: R18 063
  • Estimated net normal tax: R927 622

Because taxable income exceeds R1 million, your second estimate must be at least 80% of your actual taxable income to avoid the 20% underestimation penalty. For instance, if actual taxable income is R2 500 000, the second estimate should be R2 000 000 or more. If you filed R1 700 000 at Period 02 and the actual was R2 500 000, the 80% test would fail and an underestimation penalty could apply on the shortfall, in addition to interest.

Special situations to watch

Capital gains events

If you expect to sell a property, a business, or significant investments during the year, remember that the taxable portion of the capital gain must be included in both the first and second provisional calculations. This is a common omission that triggers penalties and interest.

Foreign income

If you have foreign income or capital gains on offshore assets, consider the section 6quat foreign tax credit rules and capture qualifying foreign tax paid. The credit mechanics on IRP6 differ from the final claim on ITR12/ITR14, so keep documentation.

Variable or seasonal income

Freelancers, farmers, and seasonal businesses often have uneven income. SARS focuses on whether your second estimate is reasonable against the year’s outcome. Use year-to-date figures plus a credible forecast for the remaining months to justify your estimate.

Changing from non-provisional to provisional mid-year

Individuals generally do not need a formal registration to become provisional. If you start earning non-PAYE income during the year (for example, you begin a side-business), add the IRP6 to your eFiling profile and file for the next relevant period.

Avoiding penalties: a practical checklist

  • Diary the dates: 31 August, 28/29 February, and the 30 September voluntary top-up (for Feb year-ends). Non-February year-ends must move these dates to six months into the year, on the last day of the year, and six months after year-end.
  • Use the basic amount wisely: If your last assessment is recent, the basic amount often provides a safe, practical floor for Period 02 when taxable income is R1 million or less. If trading conditions worsen, be ready to justify a lower figure.
  • Respect the 80% rule: If you expect taxable income above R1 million, ensure the second estimate is at least 80% of actual taxable income to avoid the underestimation penalty.
  • Pay on time: The 10% late payment penalty applies per period and is separate from underestimation penalties.
  • Top up to curb interest: Use the third payment to reduce section 89quat interest exposure if you suspect a shortfall.
  • Keep records: Maintain calculations supporting your estimates, including management accounts, invoices, forecasts, and notes explaining assumptions.
  • Include capital gains: Do not forget to include the taxable portion of any anticipated capital gains in both IRP6 periods.
  • Check credits: Accurately capture PAYE already withheld and any foreign tax credits where applicable.
  • Revisit twice a year: Reassess your status and estimates at end-August and end-February (or the equivalent six-month points for non-Feb year-ends).

Frequently asked questions

1) I only earn a salary from one employer and have no other income. Must I pay provisional tax?
No. If all your income is REMUNERATION subjected to PAYE and you have no other income sources, you are not a provisional taxpayer.

2) I have a salary with PAYE but also freelance on weekends. Am I a provisional taxpayer?
Yes. Income from your freelance work is not subject to PAYE, so you become a provisional taxpayer.

3) My only other income is bank interest below the exemption and modest rental that keeps my passive total under R30 000 for the year. Do I need to pay provisional tax?
If you do not carry on a business and your taxable income is below the tax threshold, or your passive income categories listed by SARS are R30 000 or less in total, you are not a provisional taxpayer.

4) Do I include retirement fund lump sums or severance benefits in my IRP6 estimate?
No. These must be excluded from the estimate used to calculate provisional tax. They are taxed on specific lump-sum tables outside provisional tax.

5) How do the penalties work if I am late and also underestimated?
A 10% penalty applies for late payment for each compulsory period. Separately, an underestimation penalty of 20% may apply at Period 02 if you fail the 90%/basic-amount rule (≤ R1m cases) or the 80% rule (> R1m cases). SARS reduces the underestimation penalty by any late-payment penalty already imposed for the second period, so you are not penalised twice on the same amount.

6) Are trusts and companies provisional taxpayers?
Yes. Companies are provisional taxpayers by default. Trusts generally are, unless specifically excluded (for example, a deceased estate is not a provisional taxpayer). Special trusts have particular rules for rates; always check your trust’s classification.

7) Will auto-assessment replace provisional tax for me?
No. Provisional tax is about paying during the year based on your own estimate. Auto-assessment happens after the year ends and does not remove the need to meet IRP6 obligations during the year if you are a provisional taxpayer.

A simple action plan

  1. Decide if you are provisional (use the tests above).
  2. Add IRP6 on eFiling and set calendar reminders for due dates.
  3. Build a realistic estimate for Period 01 (year-to-date results + forecast).
  4. File and pay on time.
  5. Before Period 02, update your forecast with latest numbers; apply the basic amount, 90% or 80% rules as applicable.
  6. After year-end, consider a third top-up before the effective date to curb interest.
  7. Submit your ITR12/ITR14 and keep your working papers in case SARS asks you to justify your estimate.

Final word

Provisional tax rewards organisation and realism. If you diarise the dates, estimate honestly, and understand the safe harbours, you will avoid almost all penalties and interest. When in doubt, use the last assessment as a sense-check, project your year carefully, and keep evidence of how you arrived at your numbers. That discipline keeps cash flow smooth and SARS satisfied.

Sources

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