Tax services
Provisional Tax Services South Africa
Base provisional-tax decisions on current results, credible forecasts and documented assumptions.
Provisional tax is not a separate tax. It is the mechanism for paying income tax during the year rather than in one amount afterwards, and it works on estimates, which is precisely where the risk sits.
We prepare the IRP6 estimates from actual management information rather than a guess, model the exposure before the second payment where the year has been strong, and reconcile what was paid against the final assessment.
Who this is for
Built around your operating reality
- Companies
- Business owners with non-remuneration income
- Trusts requiring assessment
- Growing businesses with volatile profit
What we deliver
A controlled, documented service
- Taxpayer-status assessment
- Forecast taxable-income model
- IRP6 calculation support
- Payment planning
- Estimate review
- Year-end top-up coordination
Common situations
When this matters most
- The second provisional payment is approaching and the year has been better than expected
- Estimates have historically been guessed rather than calculated
- An underestimation penalty has already been raised
- The company has an assessed loss and is unsure what to submit
- A first provisional return is due and nobody has done one before
- Cash flow needs planning around the payment dates
Three payments, two of them compulsory
The first payment falls six months into the year of assessment and is based on an estimate of the full year. The second falls on the last day of the year of assessment and is based on a tighter estimate. An optional third payment can be made after year end to close any remaining shortfall.
The three are not independent. The second payment settles up for the first, and the third exists specifically to stop interest running on an underpayment before the assessment is issued.
- First payment: six months into the year, on an estimate
- Second payment: last day of the year, on a tighter estimate
- Third payment: voluntary, after year end, to avoid interest
The second estimate is held to a higher standard
The underestimation penalty applies where the second estimate falls materially short of the taxable income eventually assessed. The tolerance is narrower than most taxpayers expect, and the penalty is calculated on the shortfall rather than being a fixed amount, so a strong year turns a casual estimate into a significant cost.
This is why the second payment deserves an actual calculation from management accounts, not last year’s figure repeated. Where the year has run ahead of expectation, the correct response is usually to increase the estimate rather than hope the assessment lands close.
The basic amount, and when leaning on it is a mistake
SARS provides a "basic amount" derived from your most recently assessed taxable income, which can be used as a floor for the estimate. It is a safe harbour in a flat year and a trap in a growing one.
If the business has grown materially since the last assessment, the basic amount will understate the position, and using it does not by itself protect against an underestimation penalty where the eventual taxable income is far higher.
Who is a provisional taxpayer
Companies generally fall within the provisional tax system by virtue of being companies. Individuals fall into it where they earn income that is not subject to PAYE, typically business income, rental income, or significant investment income.
Being a provisional taxpayer changes your filing calendar and, for individuals, also changes the income tax return deadline. It is worth establishing the status deliberately rather than discovering it through a penalty.
Clear steps and responsibilities
Prepare forecast
Calculate and review
Approve filing
Monitor actual results
Learn from other people’s mistakes
Where provisional tax goes wrong
Repeating last year’s estimate
In a growing business this systematically understates the second estimate, which is exactly the scenario the underestimation penalty is designed to catch.
Paying on time but estimating badly
A payment made on the due date does not protect you if the estimate was materially wrong. Timeliness and accuracy are separate tests.
Ignoring the third payment
Where the first two payments fell short, interest runs from the end of the period until the assessment is settled. A voluntary top-up usually costs less than the interest it prevents.
Not reconciling to the assessment
Provisional payments credited to the wrong period are common, and the resulting balance often surfaces only when a Tax Compliance Status request fails.
Getting started
What we use to build the estimate
- Management accounts for the year to date
- A forecast for the remainder of the year of assessment
- The most recent assessment, for the basic amount
- Details of provisional payments already made this year
- Any material once-off transactions expected before year end
- The current SARS statement of account
Connected work
What usually goes with this
Frequently asked questions
What to know before you begin
If your situation is not covered here, ask, the answer usually turns on facts a page cannot know.
Is provisional tax a separate tax? +
It is generally an advance payment toward income-tax liability, not a separate tax type.
How often is it paid? +
The applicable periods depend on the taxpayer and year of assessment. We confirm current dates for each engagement.
What if profit changes? +
Forecasts should be reviewed before later periods and year-end.
What happens if we underestimate? +
An underestimation penalty can be raised on the shortfall between the second estimate and the taxable income eventually assessed, with interest on top. Remission can be requested where the estimate was made on a reasonable basis, which is far easier to argue where a calculation exists.
Do we pay provisional tax in a loss year? +
The estimate reflects the expected position, so a genuine loss year generally results in a nil estimate. The return is still submitted. A nil IRP6 is still a filing obligation.
Are individuals provisional taxpayers? +
Where you earn income not subject to PAYE, business income, rental, or significant investment income. You generally are. Salary earners with no other income usually are not.
Talk to M&J about tax services
Tell us where you are and what is outstanding. We will come back with a scope and a clear next step rather than a generic quote.
- Taxpayer-status assessment
- Forecast taxable-income model
- IRP6 calculation support
Prefer to talk? +27 87 078 2478
Request a consultation
An M&J consultant will come back to you with the next step.