Who is a provisional taxpayer, and how do you register?

The basic test

A natural person is a provisional taxpayer if they derive income that is not remuneration, or an allowance or advance from an employer. Put plainly: if money reaches you without PAYE having been deducted first, you are in scope.

This is why independent contractors are almost always provisional taxpayers. You invoice, the client pays the full amount, and nothing is withheld along the way.

• You invoice clients in your own name rather than drawing a salary.
• No IRP5 is issued to you for that income.
• Your total taxable income for the year exceeds the tax threshold for your age.

Who is excluded

Not everyone with a bit of non-salary income is caught. The main exclusions are:

• People whose taxable income for the year does not exceed the tax threshold for their age group.
• Individuals whose only non-remuneration income is interest, dividends, rental from residential property or similar amounts, and where that total stays below the threshold SARS publishes each year.
• Approved public benefit organisations, deceased estates and certain other entities specified in the Fourth Schedule.
• Small business funding entities and body corporates.

Salaried with a side income

This is the grey area most people ask about. If you have a full-time job with PAYE deducted and you also freelance on the side, the freelance income has no tax withheld against it. Once that side income is more than incidental, you become a provisional taxpayer for it.

Your IRP6 estimate then covers your total taxable income for the year — salary plus freelance — and you subtract the employees' tax your employer already paid over. You are not taxed twice; the PAYE is credited.

How to register on eFiling

Registration is done through your existing SARS eFiling profile. You do not need a new tax number — provisional tax is added to the tax number you already have.

• Log in to eFiling and open the 'Home' or 'Organisations' tab, depending on your profile type.
• Go to Tax Types (sometimes shown under 'Tax Registration' or 'Manage Tax Types').
• Tick 'Provisional Tax (IRP6)' and submit the activation request.
• Once activated, the IRP6 return appears under Returns Issued for each period.
• If the return does not appear, use 'Request Return' and select the relevant period before the due date.

What happens if you should have registered but did not

Not being registered does not remove the obligation. SARS can raise the underestimation and late payment penalties retrospectively, together with interest, once the annual return reveals income that should have been paid provisionally.

The practical fix is to activate the tax type and submit for the current period as soon as you realise. Paying late is materially cheaper than not paying at all, because the 10% late payment penalty applies once while interest keeps accruing.