The Complete Guide to Provisional Tax in South Africa (2025)

If you're a freelancer, contractor, or small business owner in South Africa, understanding provisional tax is essential. This guide is updated for the 2025/2026 tax year and explains in plain language:

• who SARS expects to register as a provisional taxpayer
• how the IRP6 system works in practice
• what the 2025/2026 deadlines and penalties look like
• how to avoid nasty surprises at assessment time

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Key takeaways (South Africa)

• Provisional tax is not a separate tax – it’s a way of paying your normal income tax in advance.
• You generally become a provisional taxpayer when your non‑salary income is more than R30,000 or you run a business in your own name.
• There are two compulsory IRP6 payments (August and February) and an optional third “top‑up” payment in September.
• SARS penalties can be significant: 10% for late payment and up to 20% for under‑estimation, plus interest.
• Tools like TaxTrack SA help you keep a live view of your income, deductions, and estimated provisional tax so you’re not guessing.

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What is Provisional Tax?

Provisional tax is a method of paying your income tax in advance, in instalments, rather than as a single lump sum at the end of the tax year. It's designed to help spread your tax burden throughout the year and ensure SARS receives tax revenue more regularly.

Unlike PAYE (Pay As You Earn) tax, which is automatically deducted from salaries, provisional tax requires taxpayers to estimate their income and make payments directly to SARS.

Who must pay provisional tax?

You must register as a provisional taxpayer if you:

1. Receive income other than a salary (from employment) that exceeds R30,000 per year
2. Earn taxable income exceeding the tax threshold (R95,750 for under 65s in 2025)
3. Are a company, close corporation, or trust that carries on business in South Africa

Common examples in South Africa include:

• Freelancers and independent contractors
• Rental property owners
• Investment income earners (dividends, interest above the exemption)
• Commission earners without PAYE deductions
• Small business owners
• Part-time self-employed individuals

Who is exempt?

You don't need to pay provisional tax if:

• Your only income is a salary where PAYE is deducted
• Your additional income is less than R30,000 per year
• You qualify for the small business corporation (SBC) exemption

Provisional tax deadlines for 2025/2026

For the tax year ending 28 February 2026:

Important notes

• The third payment is optional but recommended if you've underpaid
• Deadlines falling on weekends or public holidays move to the next business day
• Late payments attract penalties and interest

How to calculate provisional tax

Step 1: Estimate your taxable income

Add up all expected income for the year:

• Freelance/consulting income
• Business profits
• Rental income
• Investment returns
• Any other taxable income

Step 2: Subtract allowable deductions

Common deductions include:

• Retirement annuity contributions (up to 27.5% of taxable income, max R350,000)
• Medical aid contributions and qualifying medical expenses
• Home office expenses (if you work from home)
• Business expenses directly related to earning income

Step 3: Apply the tax tables

Use the SARS tax tables for the relevant year. For 2025/2026:

Step 4: Apply rebates

• Primary rebate (under 65): R17,235
• Secondary rebate (65-74): R9,444
• Tertiary rebate (75+): R3,145

Step 5: Subtract PAYE already paid

If you also earn a salary, subtract the PAYE already deducted.

Penalties for non‑compliance

SARS takes provisional tax seriously. Penalties include:

Late payment penalty

• 10% of the underpaid tax if you pay after the deadline

Under‑estimation penalty

• 20% penalty if your estimate is less than 80% of actual taxable income (first period)
• 20% penalty if your estimate is less than 90% of actual taxable income (second period)

Interest

• Interest is charged at the prescribed rate (11.25% per year, effective 1 January 2025) on any underpaid amounts

Tips to avoid penalties

1. Keep accurate records throughout the year
2. Use the "basic amount" method if your income is similar to last year
3. Overestimate slightly rather than underestimate
4. Make the third payment if you realize you've underpaid
5. Track your income monthly using tools like TaxTrack SA

First vs second payment

First payment (August)

• Based on estimated full-year income
• Some taxpayers can pay 50% of the previous year's assessment
• More room for error (80% accuracy required)

Second payment (February)

• Based on actual/near-actual income
• Must be 90% accurate
• Calculate carefully to avoid penalties

Common mistakes to avoid

1. Forgetting to register - Register with SARS as soon as you start earning provisional income
2. Missing deadlines - Set reminders well in advance
3. Poor record keeping - Keep all invoices, receipts, and bank statements
4. Ignoring the third payment - Use it to correct underpayments
5. Not claiming deductions - Don't leave money on the table

How TaxTrack SA can help

TaxTrack SA simplifies provisional tax tracking by:

• Automatically calculating your estimated tax liability
• Tracking income and expenses throughout the year
• Reminding you of important SARS deadlines
• Categorizing transactions for tax purposes
• Providing real-time tax projections

Start tracking your provisional tax today – it’s free to get started.

Conclusion

Provisional tax doesn't have to be complicated. By understanding the basics, keeping good records, and using tools to help you stay organized, you can meet your tax obligations without stress.

Remember: it's always better to pay slightly more than to face penalties for underpayment. And if you're unsure about anything, consult a registered tax practitioner.

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Disclaimer: This guide is for informational purposes only and should not be considered tax advice. Tax laws change regularly – always verify with SARS or a registered tax professional.