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What is it?
Provisional tax is not a separate tax from income tax. It is a method of paying the income tax liability in advance, to ensure that the taxpayer does not have a large tax debt on assessment. Provisional tax allows the tax liability to be 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 are based on estimated taxable income. A third payment is optional after the end of the tax year, but before the issuing of the assessment by SARS. On assessment the provisional payments will be off-set against the liability for normal tax for the applicable year of assessment.
Who is a Provisional Taxpayer?
Any person who receives income (or to whom income accrues) other than remuneration, is a provisional taxpayer. Most salary earners are therefore not-provisional taxpayers, if they have no other sources of income. It is important to note that receiving exempt income, as follows, does not make you a provisional taxpayer:
- If you receive interest of less than R23 800 if you are under 65; or
- If you receive interest of less than R34 500 if you are 65 and older or;
- You receive exempt amount from a tax free savings account.
A provisional taxpayer is defined in paragraph 1 of the Fourth Schedule of the Income Tax Act, No.58 of 1962, as any –
- natural person who derives income, other than remuneration or an allowance or advance as mentioned in section 8(1) or who derives remuneration from an employer who is not registered for employees’ tax (for example, an embassy is not obligated to register as an employer for employees’ tax purposes)
- company; or
- 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 –
- approved public benefit organisations or recreational clubs that have been approved by the Commissioner in terms of s30 or s30A;
- body corporates, share block companies or certain associations of persons that are exempt from tax;
- non-resident owner or charterer of ships or aircraft;
- 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 (for 2023 tax year: for taxpayers below age of 65 –
R91 250; age 65 to below 75 – R141 250 and age 75 and over – R157 900); or the taxable income of that person (earned from interest, foreign dividends, rental from letting of fixed property and remuneration from unregistered employer) will not be more than R30 000; - a small business funding entity;
- a deceased estate.
- any association that has been approved by the Commissioner under section 30B(2)
Note:
Companies automatically fall into the provisional tax system. There is no longer a registration or deregistration process to be a provisional taxpayer. The onus is on the taxpayer to determine if he or she is liable for provisional tax, and to request and submit an IRP6 return via eFiling.
What steps must I take to work out the amounts due?
The amount of provisional tax payable is worked out on the estimated taxable income for that particular year of assessment, as follows:
- The First Period:
- 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 Second 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 first provisional period.
- The Third Period (voluntary):
- 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.
For more information on how to work out the amounts due, click here.
How should it be paid?
The current process includes:
- Register for SARS eFiling. The eFiling facility allows you to request for an IRP6 return and make your submission and payments online. You can register once for all different tax types using the client information system.
- If you are already an eFiler, simply add provisional tax to your profile so that you can access and file your IRP6 return online.
When should it be paid?
- The first provisional tax payment must be made within six months of the start of the year of assessment. For years of assessment starting March, this will be 31 August, if it is a business day, or the last business day before that date if it falls on a Saturday, Sunday or public holiday.
- The second payment must be made no later than the last working day of the year of assessment. This will be last business day of February.
- The third payment is voluntary and may be made:
- for companies with a year end of the last day of February, and any other person (other than a company), the last business day of September;
- in any other case, within six months of the end of the year of assessment.
General
- If the provisional taxpayer does not submit the final provisional tax return within four months after the last day of the year of assessment, then the provisional taxpayer is deemed to have submitted an estimate of an amount of nil taxable income.
- If the Commissioner is not satisfied with the estimate of taxable income made by the taxpayer, the Commissioner can increase the taxpayer’s estimate.
- If the taxpayer does not make any estimate (fails to submit the IRP6s), the Commissioner can estimate the taxable income.
Top Tip: Remember that, by submitting the return and payment timeously and accurately, you can ensure a hassle-free, smooth submission. Insufficient payment and/or underestimation of taxable income may lead to you being charged with penalties and interest.
To access this page in different languages click on the links below:
Related Documents
GEN-PT-01-G01 – Guide for Provisional Tax – External Guide
GEN-PT-01-G02 – How to eFile your Provisional Tax Return – External Guide
IRP3(a) – Application for Tax Directive Gratuities – External Form
IT-AE-36-G02 – Comprehensive Guide to the Income Tax return for Trusts – External Guide
IT-PT-AE-01-G02 – How to eFile your Provisional Tax Return – External Guide
IT77C – Application for registration Company – External form
IT77TR – Application for registration of a Trust – External form
LAPD-Gen-G08 – Guide on the Taxation of Professional Sports Clubs and Players
LAPD-IT-G19 – Comprehensive Guide to Dividends Tax
LAPD-IT-G21 – Guide on the Taxation of Foreigners working in South Africa
LAPD-IT-G24 – Guide on Mutual Agreement Procedures
LAPD-IT-G29 – PIT FAQs Foreign Employment Income Exemption
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