What is Provisional Tax and do I have to pay that.

Provisional tax is not a separate tax from Income 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 are based on estimated taxable income.

Who qualifies to pay provisional tax?

Any person, (other than a company) who earns income which is not remuneration, an allowance or advance as contemplated in section 8(1) or who earns remuneration from an employer that is not registered for employees’ tax.

Any Company (other than those specifically excluded).

Any person notified by the Commissioner of SARS.

How does provisional tax payments work?

On a six-monthly basis, the taxpayer has to submit an estimate of their taxable income for the previous period. 

This is based on the previously submitted income tax return and the current period for which the provisional tax will calculated for.

For individuals, income derived from salaries are exempt from the calculation as PAYE is already deducted.

When are provisional tax payments due?

For individuals and other legal entities with February year-ends, the due dates are as follows:

31st of August for the First provisional tax return

28 February for the Second provisional tax return

For companies and other legal entities with other year-end dates, the provisional tax returns are due as follows:

6 months after the start of the financial year for the First Provisional Tax return

12 months after the start of the financial year for the Second Provisional Tax return.

For any assistance with regards to provisional tax returns or audits, kindly reach out to us for assistance.