Provisional tax is not a separate tax — it is a method of paying your income tax in advance, in two compulsory instalments during the year rather than one large amount after assessment. Every company is automatically a provisional taxpayer. Individuals are provisional taxpayers if they earn income that is not remuneration, such as rental, business or investment income, subject to an exemption.
The most costly misunderstanding about provisional tax is that it is an extra tax. It is not. It is the same income tax, collected earlier — but the penalties for estimating badly are real, and they are the reason provisional tax deserves attention rather than resentment.
TL;DR
Every company is a provisional taxpayer, automatically.
Individuals are provisional taxpayers if they earn non-remuneration income, unless exempt.
Exemption: you carry on no business AND your taxable income will either not exceed the R99,000 threshold, or consist only of interest, dividends, rental and foreign income not exceeding R30,000 for the 2026 tax year.
First payment: six months into the year of assessment.
Second payment: the last day of the year of assessment.
Voluntary third payment: within six months of year-end, to stop interest.
20% penalty if the second estimate is below 80% of final taxable income.
10% penalty for late payment.
Who is a provisional taxpayer
Companies: always
Every company is a provisional taxpayer, regardless of size, turnover or whether it made a profit. A dormant company still submits IRP6 returns, declaring nil.
Individuals: it depends on your income type
You are a provisional taxpayer if you earn income that is not remuneration — rental income, business or freelance income, investment income, or remuneration from an unregistered employer.
You are exempt if you carry on no business AND your taxable income will either:
(a) not exceed the tax threshold — R99,000 for a person under 65 in 2026/27; or
(b) consist only of interest, dividends, rental income and foreign income not exceeding R30,000 for the 2026 tax year.
That R30,000 limit is low, and it is the reason most people with a rental property or meaningful investment income are provisional taxpayers without realising it.
Trusts: it depends on vesting
A trust is a provisional taxpayer if it receives or accrues taxable income during the year of assessment and that income is not fully vested in beneficiaries in the same year under section 25B — the conduit-pipe principle.
Where all income is validly vested, the trust may have no taxable income and therefore may not meet the definition. Where income is retained in the trust, or vests in non-resident beneficiaries, the trust will have taxable income and will be a provisional taxpayer.
The payment dates
| Payment | When | Based on |
|---|---|---|
| First (IRP6/1) | Six months into the year of assessment | An estimate of taxable income for the full year |
| Second (IRP6/2) | Last day of the year of assessment | An estimate of actual taxable income for the year |
| Third (voluntary top-up) | Within six months after year-end | Actual figures, to stop interest accruing |
For a February year-end — most individuals and many companies:
First: 31 August
Second: 28 or 29 February
Voluntary top-up: 30 September
For a company with a different year-end, the dates shift with it. A June year-end company pays first on 31 December and second on 30 June.
The final ITR14 or ITR12 return is then filed later, and the assessment either confirms the provisional payments or produces a balance owing or refundable.
How the two payments differ
This is the part that matters most, because the rules are not the same.
First payment: the basic amount
For the first payment you may generally base the estimate on the basic amount — broadly, the taxable income from your most recently assessed year, escalated by 8% a year where that assessment is more than 18 months old.
This is a genuine safe harbour. Using the basic amount for the first payment protects you from underestimation penalties on that payment, even if the year turns out to be far better than the last one.
Worked example. Your 2025 assessment showed taxable income of R800,000. For the first 2027 provisional payment you estimate R800,000, calculate the full-year tax, and pay half of it, less any PAYE and credits.
Second payment: no hiding place
The second payment must be based on an estimate of your actual taxable income for the year. The basic amount does not protect you here in the same way.
If your estimate comes in below 80% of your final taxable income, a 20% underestimation penalty applies to the shortfall.
The penalty is on the difference between the tax on 80% of actual taxable income and the tax you actually paid. On a business that budgeted for R900,000 and finished on R1,500,000, the exposure is substantial.
Worked example: a full year for a company
Company with a February year-end. Estimated taxable income R1,200,000. Standard 27% rate.
Full-year tax: R1,200,000 × 27% = R324,000
First payment, due 31 August: 50% of the estimated full-year tax = R162,000
Second payment, due 28 February: Actual estimated taxable income now looks like R1,400,000. Full-year tax: R1,400,000 × 27% = R378,000 Less first payment: R162,000 Second payment = R216,000
Check the 80% rule: if final taxable income comes in at R1,450,000, then 80% of that is R1,160,000 — comfortably below the R1,400,000 estimated. No penalty.
If instead the company had estimated R1,000,000 and final taxable income was R1,450,000: 80% of R1,450,000 is R1,160,000, which exceeds the R1,000,000 estimate. The estimate was below 80% of actual, and a 20% penalty applies to the shortfall.
The third payment is optional but often worth it
There is no obligation to make a third payment. There is, however, an obligation to pay interest if you underpaid.
Where your provisional payments fall short of your final liability, section 89quat interest runs from the effective date — six months after year-end for a February year-end taxpayer, so 30 September.
Making a voluntary top-up payment by that date stops the interest clock. At 10.25% per annum, on a shortfall of R300,000, that is roughly R2,563 a month of avoidable interest.
The arithmetic is simple: if you know you have underpaid and the assessment is months away, paying early is almost always cheaper than the interest.
Note the asymmetry: SARS pays interest on overpaid provisional tax at only 6.25%. Deliberately overpaying to be safe is not free.
How to pay and file
Provisional tax is declared on an IRP6 through eFiling.
1. Estimate taxable income for the full year of assessment. 2. Calculate the tax on that estimate using the applicable rates. 3. Deduct allowable credits — PAYE already deducted, foreign tax credits, and for the second payment, the first payment already made. 4. Submit the IRP6 and pay by the due date.
Late payment attracts a 10% penalty, plus interest at 10.25% per annum.
A nil IRP6 is still required. A company or individual who is a provisional taxpayer but expects no taxable income must still submit the return declaring nil. Not submitting leaves the period outstanding and affects your tax compliance status.
Getting the estimate right
The single biggest driver of provisional tax pain is estimating from stale information.
Close your books before the estimate, not after. A second provisional payment estimated from a general sense of how the year went is how the 80% rule catches people. Management accounts to month ten give you a real basis.
Remember the differences between profit and taxable income. Depreciation is replaced by wear and tear, entertainment and fines are added back, provisions are usually not deductible until incurred, and assessed losses brought forward can only offset 80% of taxable income or R1 million if higher.
Do not forget capital gains. A property or business asset sold during the year is included in taxable income and can transform your position. Note also that for property, the CGT event arises when the sale agreement is signed, not when transfer is registered at the Deeds Office — so a February signature falls into that tax year even if transfer only happens in May.
Build in a margin on the second estimate. Because the penalty is asymmetric — 20% for underestimating, only lost interest at 6.25% for overestimating — a slightly conservative second estimate is usually the cheaper error.
Frequently asked questions
What is provisional tax in South Africa? It is a method of paying income tax in advance, in two compulsory instalments during the year of assessment rather than in one amount after assessment. It is not an additional tax.
Am I a provisional taxpayer? Every company is. An individual is a provisional taxpayer if they earn income that is not remuneration — such as rental, business or investment income — unless they carry on no business and their taxable income will either not exceed the R99,000 threshold, or consist only of interest, dividends, rental and foreign income not exceeding R30,000 for the 2026 tax year.
When is provisional tax due? The first payment is due six months into the year of assessment and the second on the last day of it. For a February year-end that is 31 August and 28 February. A voluntary third payment can be made within six months after year-end, by 30 September for a February year-end.
What is the penalty for underestimating provisional tax? A 20% penalty applies where the second estimate is below 80% of final taxable income. Late payment separately attracts a 10% penalty plus interest at 10.25% per annum.
What is the basic amount for provisional tax? Broadly the taxable income from your most recently assessed year, escalated by 8% a year where that assessment is more than 18 months old. It can be used for the first payment and provides protection against underestimation on that payment.
Do I have to submit a provisional tax return if I made a loss? Yes. You still submit an IRP6 declaring nil. Not submitting leaves the period outstanding and affects your tax compliance status.
Is it worth making a third provisional payment? Usually, if you know you have underpaid. It stops section 89quat interest running at 10.25% per annum from the effective date, which for a February year-end taxpayer is 30 September.
Does provisional tax apply to a dormant company? Yes. Every company is a provisional taxpayer regardless of activity, and a dormant company must still submit IRP6 returns declaring nil.
Estimates built on actual numbers
Provisional tax goes wrong for one reason more than any other: the estimate is made from memory rather than from books. The 80% rule does not punish bad luck, it punishes bad information.
Smartbook keeps management accounts current month by month, so the second provisional estimate is built on ten months of real figures rather than a guess — and prepares and submits both IRP6 returns.
Last reviewed: 26 July 2026. Written by the Smartbook team — SAIPA and SAICA accredited, SARS registered tax practitioners. Worked examples are illustrative. Confirm your own payment dates against your year of assessment. General guidance, not advice on your circumstances.
Primary sources: SARS — Budget 2026 Frequently Asked Questions · SARS — Provisional Tax · SARS — Tax Rates