Provisional tax requires companies and qualifying individuals (those with income beyond a salary, such as rental or freelance income) to pay income tax in advance of the year-end assessment, rather than in one lump sum afterward. The return filed for each instalment is the IRP6.
What it means
Two compulsory provisional payments fall during the tax year, with an optional third top-up payment after year-end to avoid interest if the estimate was too low. The total paid is offset against the final tax liability once SARS issues the assessment.
Where it fits in
Provisional tax is an income tax mechanism for the business or individual taxpayer, separate from PAYE, which an employer withholds from employees throughout the year on their behalf. An employee with only salary income is generally not a provisional taxpayer because PAYE already covers it.
Key rules
- Income tax paid in advance via the IRP6 return.
- Two compulsory instalments per year, plus an optional top-up.
- Offset against the final assessment once issued.
- Distinct from PAYE, which an employer withholds on an employee's behalf.
