Provisional Tax in South Africa: Who Pays, Deadlines & How to Calculate

Provisional tax is not a separate tax — it is a mechanism for paying your income tax in instalments during the year instead of a single lump sum after year-end. If you earn income outside of a salary, you are likely a provisional taxpayer. This guide explains everything you need to know.

What Is Provisional Tax?

Provisional tax requires you to pay your estimated income tax liability in two (or optionally three) instalments during the tax year. SARS uses this system to collect tax throughout the year from taxpayers whose income is not fully covered by PAYE.

At the end of the tax year, your actual tax liability is calculated, and any difference between what you paid provisionally and what you owe is either refunded or demanded as a top-up payment.

Who Must Pay Provisional Tax?

You are a provisional taxpayer if you earn income from:

• Business or trade as a sole proprietor
• Freelance or consulting work
• Director's fees (unless PAYE is deducted)
• Rental income from property
• Investment income (interest, dividends)
• Any other income not subject to PAYE

Companies, close corporations, and trusts are automatically provisional taxpayers regardless of their income type.

Exemptions: Individuals whose only income is a salary (with PAYE deducted) are generally not provisional taxpayers. However, if you earn more than R30,000 of non-salary income (e.g. rental income or freelance earnings), you may need to register as a provisional taxpayer.

Provisional Tax Deadlines for 2026/2027

The tax year runs from 1 March to 28/29 February. The payment schedule is:

How to Calculate Provisional Tax

Step 1: Estimate Your Total Taxable Income for the Year

Use your prior year income as a baseline and adjust for expected changes. Common adjustments include new contracts, expected growth, or known expenses that will reduce your income.

Step 2: Calculate the Expected Tax Liability

Apply the relevant tax rates to your estimated income:

• Individuals: Use the SARS income tax tables (18%–45% for 2026/2027)
• Companies: 27% flat rate (or reduced Small Business Corporation rates if eligible)
• Trusts: 45% flat rate

Step 3: Subtract Rebates and PAYE

Individuals can deduct the primary rebate (R17,235 for 2026/2027) and any secondary/tertiary rebates if applicable. If you also earn a salary with PAYE deducted, subtract that PAYE from your estimated liability.

Step 4: Divide Into Two Payments

The first payment (by 31 August) should be 50% of your estimated annual tax liability. The second payment (by 28 February) should be the balance, adjusted based on your revised estimate.

How to Pay Provisional Tax

Payments are made via SARS eFiling using the IRP6 return. You can pay through:

• Direct deposit into SARS bank account (with the correct reference number)
• EFT on SARS eFiling
• At a SARS branch (not recommended)

Each payment requires a separate IRP6 return submission on eFiling. The system will generate your payment reference number.

Penalties for Underestimating or Missing Payments

SARS imposes penalties if you underestimate your provisional tax or miss deadlines:

• Underestimation penalty: If your estimate is less than 80% of actual taxable income (or 90% for certain taxpayers), SARS charges a 20% per annum penalty on the shortfall.
• Late payment penalty: 10% of the unpaid amount for late payments.
• Interest: SARS charges interest at the prescribed rate (currently 10.5% per annum) on any outstanding amounts from the due date.

Tips for Managing Provisional Tax

• Set aside 25-30% of all non-salary income for tax throughout the year.
• Keep accurate financial records to make realistic estimates.
• Use the third (voluntary) payment if your actual income exceeds your estimate significantly.
• Work with an accountant to avoid underestimation penalties.
• Pay early if possible — SARS does not pay interest on overpayments.