How do you calculate provisional tax in South Africa?

Estimate your taxable income for the full tax year, apply the SARS sliding scale for that year, subtract your rebates and medical tax credits, then pay half at the first period and the balance of the full-year figure at the second period.

How is the first provisional tax payment calculated?

It is half of the estimated total tax for the full year, after rebates and credits, less any employees' tax already deducted on your behalf.

How is the second provisional tax payment calculated?

You recalculate the tax on your revised full-year taxable income, then subtract the amount you paid at the first period. The difference is the second payment.

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How to calculate provisional tax: worked examples

The calculation itself is not complicated — it is ordinary income tax arithmetic applied to an estimate rather than an actual. What confuses people is the order of the steps and how the second payment offsets the first. This guide walks through both, with real numbers.

The five steps

Every provisional tax calculation follows the same sequence. Get the order right and the rest is arithmetic.

Step 1: Estimate your gross income for the full tax year (1 March to the last day of February), converting any foreign invoices to rand.
Step 2: Subtract allowable deductions — business expenses, home office costs, retirement annuity contributions.
Step 3: Apply the SARS sliding scale for that tax year to the resulting taxable income.
Step 4: Subtract the rebates you qualify for, and your medical scheme fees and additional medical expenses tax credits.
Step 5: For the first period, pay half. For the second period, pay the full-year figure less what you already paid.

Worked example: first payment

Take a contractor under 65 who expects to invoice R900 000 for the year. She has R120 000 of allowable business expenses and contributes R60 000 to a retirement annuity. She is on a medical scheme with no dependants.

Estimated taxable income: R900 000 less R120 000 less R60 000 = R720 000.

Apply the sliding scale for the relevant tax year to R720 000 to get the tax before rebates. Subtract the primary rebate, then subtract the medical scheme fees tax credit for twelve months (the credit is a fixed monthly amount per member and per dependant, published by SARS each year).

Suppose that leaves R185 000 of tax for the full year. The first provisional payment, due by 31 August, is half of that: R92 500.

Worked example: second payment

By February the same contractor has a much better view of her year. Say the work picked up and she actually invoiced R1 050 000, with expenses of R130 000 and the same R60 000 retirement annuity.

Revised taxable income: R1 050 000 less R130 000 less R60 000 = R860 000.

Run the same sliding scale, rebate and medical credit calculation on R860 000. Suppose the full-year tax now comes to R235 000.

The second payment is the full-year figure less what was already paid: R235 000 less R92 500 = R142 500, due by the last day of February.

Where foreign income changes the arithmetic

If you invoice in dollars, euros or pounds, SARS wants the rand figure. You may use the actual rand that landed in your bank account, or convert at the spot rate on the date of receipt, or use the average exchange rate for the year — but you must be consistent.

Where a foreign client withheld tax at source, a section 6quat foreign tax credit may reduce your South African liability. That credit is claimed in the calculation, which means your provisional estimate should account for it rather than overpaying and waiting for a refund.

Staying inside the safe harbour

The second estimate is the one SARS scrutinises. For taxable income of R1 million or less, your estimate must generally reach the lower of 90% of actual taxable income or 100% of the taxable income assessed for the latest preceding year. Above R1 million, it must be at least 80% of actual taxable income.

Miss it and an underestimation penalty applies to the shortfall. This is why the second estimate should be made as late as the deadline allows, using the most complete picture of the year you have.

Doing it without a spreadsheet

The arithmetic is stable, but the inputs move every month as invoices land and the rand shifts. Recalculating by hand each time is where errors creep in.

The free Provio calculator runs these steps for you on the current SARS tables, and the full platform keeps the estimate updating automatically as you capture income and deductions through the year.

Common questions

How do you calculate provisional tax in South Africa?: Estimate your taxable income for the full tax year, apply the SARS sliding scale for that year, subtract your rebates and medical tax credits, then pay half at the first period and the balance of the full-year figure at the second period.
How is the first provisional tax payment calculated?: It is half of the estimated total tax for the full year, after rebates and credits, less any employees' tax already deducted on your behalf.
How is the second provisional tax payment calculated?: You recalculate the tax on your revised full-year taxable income, then subtract the amount you paid at the first period. The difference is the second payment.

Sources

Rates, thresholds and penalty rules change each tax year. This guide summarises published SARS guidance for general information and is not professional tax advice.