Provisional Tax

Who is it for and when should it be paid?

What is it?

Provisional tax is not a separate tax. It is a method of paying tax due, to ensure the taxpayer does not pay large amounts on assessment, as the tax liability is spread over the relevant year of assessment. It requires the taxpayers to pay at least two amounts in advance, during the year of assessment, which is based on estimated taxable income. A third payment is optional after the end of the tax year but before the issuing of the assessment.

Who is it for?

Any person who receives an income other than a salary is a provisional taxpayer. A provisional taxpayer is:

• a natural person who derives income, other than remuneration or an allowance;
• company; or
• a person who is told by the Commissioner that he or she is a provisional taxpayer.

Excluded from being a provisional taxpayer as defined are any –

• Any natural person who does not earn any income from carrying on any business – provided that person’s taxable income will not be more than the tax threshold; or
• the taxable income of that person (earned from interest, foreign dividends and rental from letting of fixed property) will not be more than R30 000;

When should it be paid?

The first provisional tax payment – IRP6/1 – must be made within six months of the start of the year of assessment for 31 August or six months after the approved financial year-end date.

The second payment – IRP6/2 – must be made no later than the last working day of the year of assessment ending 28/29 February.

The third payment is voluntary and may be made –

• within seven months of the year of assessment, where the year of assessment ends in February, which is 30 September and
• within six months of the year of assessment, in any other case.

Our Services:

At SME.TAX we do more than just assist clients with their provisional taxes.

We are your “one stop SME shop”, assisting with everything from Accounting, Business Management, BEE, Consulting, Company Registration to Payroll and Mentoring.

For more information, please visit our website www.sme.tax or give us a call on 087 238 4357