Do You Qualify As A Provisional Taxpayer

What is provisional tax?

Provisional tax is not a separate tax, but a method to regulate the amount of income tax paid to the South African Revenue Services (SARS). In order to avoid making one large tax payment to SARS, provisional tax payments are made during a tax year.

With each provisional tax declaration, the taxpayer needs to estimate their taxable income for the full tax year based on information available at the time of the estimate.

It is of utmost importance to ensure that the estimate is done as accurate as possible, as SARS may impose underestimation penalties if the estimate was not at least 80% accurate (if actual taxable income is over R1 million) or 90% accurate (if actual taxable income is under R1 million).

Requirements for registration?

Any person, who receives taxable income other than a salary, is a provisional taxpayer. 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;
  • Any company; or
  • Any person who is notified 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;
  • Body corporates, share block companies or certain associations of persons; and
  • Persons who are exempt from paying provisional tax, namely:
    • Non-resident owners or charterers of ships or aircraft;
    • 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 (for 2020 tax year: for taxpayers below age of 65 – R79 000; age 65 to below 75 – R122 300 and age 75 and over – R136 750); 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 is provisional tax payable?

There are two compulsory provisional tax declarations and payments per tax year, with a voluntary third provisional payment to account for any underpayment of provisional tax. 

The deadlines for submission of provisional tax declarations (IRP6) and payments depend on the type of taxpayer and their year-end. The deadlines for the 2020 tax year (relating to the period 1 March 2019 to 29 February 2020) are as follows –  

For individuals, Trusts and Companies with a February year end:

  2020 first provisional tax (compulsory)
31 August 2019
  2020 second provisional tax (compulsory)
29 February 2020
  2020 third provisional tax (voluntary)
30 September 2020

For Companies with a different year end than February:

  2020 first provisional tax (compulsory)
6 months after year end
  2020 second provisional tax (compulsory)
12 months after year end
  2020 third provisional tax (voluntary)
6 months after second provisional tax

If you require any additional information relating to provisional tax, please do not hesitate to contact our offices.

The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.