What is provisional tax in simple terms?

It is ordinary income tax paid in advance, in two instalments during the tax year, by people who do not have PAYE deducted from their income. It is a payment method, not a separate kind of tax.

Is provisional tax an extra tax on top of income tax?

No. It is the same income tax, paid earlier. Whatever you pay provisionally is credited against your final liability when you submit your annual ITR12 return.

Do I still submit a normal tax return if I pay provisional tax?

Yes. The IRP6 provisional returns are estimates paid during the year; the annual ITR12 reconciles them against your actual income and either refunds the difference or bills you for it.

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What is provisional tax in South Africa?

Provisional tax is not a separate tax. It is income tax you pay in advance, during the tax year, instead of waiting until the year is over. SARS uses it to collect tax from people whose income does not have PAYE deducted from it — most obviously freelancers, independent contractors, landlords and business owners. This guide explains what it is and why it applies to you.

Provisional tax is a payment method, not a tax type

This trips almost everyone up the first time. There is no separate 'provisional tax rate'. You are paying ordinary income tax, worked out on the same sliding scale as everyone else, just earlier and in instalments.

A salaried employee pays their income tax monthly, automatically, because their employer withholds PAYE and hands it to SARS. If you invoice clients, no one does that for you. Provisional tax is simply the mechanism that puts you on a similar footing: you estimate what you will owe for the year and pay it across two instalments.

At the end of the year you still submit an annual return (the ITR12). That return calculates your real liability and subtracts the provisional payments you already made. If you overpaid, you get a refund. If you underpaid, you settle the difference.

Why SARS collects it twice a year

Government spending happens continuously, so tax revenue needs to arrive continuously rather than in one lump at year end. Splitting the year into two periods also protects you: paying roughly half your liability in August makes the February payment far less painful than facing the whole amount at once.

The South African tax year for individuals runs from 1 March to the last day of February. The first provisional payment covers the first six months and falls due at the end of August. The second covers the full year and falls due at the end of February.

Who has to pay it

You are a provisional taxpayer if you earn income that is not remuneration from which employees' tax is deducted. In practice that means:

Independent contractors and freelancers who invoice clients, locally or abroad.
Sole proprietors and people trading in their own name.
Anyone earning meaningful rental, interest or other non-salary income above the SARS thresholds.
Company directors and salaried people with a substantial side income that has no PAYE withheld.

How it differs from your annual return

The IRP6 is the provisional tax return. You submit two of them each year, and each one is an estimate you make yourself. The ITR12 is the annual income tax return, submitted after year end, and it deals in actual figures rather than estimates.

Both are required. Submitting your ITR12 does not excuse you from the IRP6 payments, and paying provisionally does not excuse you from the annual return.

What it means for your cash flow

The single biggest mistake new contractors make is spending the full value of every invoice. The tax on that income is already owed the moment you earn it; it just has not been collected yet.

Move a portion of every payment into a separate account on the day it lands. The right portion depends on your bracket, your deductions and your medical credits, which is exactly the calculation Provio keeps running for you as invoices come in.

Common questions

What is provisional tax in simple terms?: It is ordinary income tax paid in advance, in two instalments during the tax year, by people who do not have PAYE deducted from their income. It is a payment method, not a separate kind of tax.
Is provisional tax an extra tax on top of income tax?: No. It is the same income tax, paid earlier. Whatever you pay provisionally is credited against your final liability when you submit your annual ITR12 return.
Do I still submit a normal tax return if I pay provisional tax?: Yes. The IRP6 provisional returns are estimates paid during the year; the annual ITR12 reconciles them against your actual income and either refunds the difference or bills you for it.

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.