Provisional tax is not a separate tax from income tax. It is a method of paying the income tax liability in advance, to ensure that the taxpayer does not remain with a large tax debt on assessment. Provisional tax allows the tax liability to be spread over the relevant year of assessment. It requires the taxpayers to pay at least two amounts in advance, during the year of assessment, which are based on estimated taxable income.

A third payment is optional after the end of the tax year, but before the issuing of the assessment by SARS. On assessment the provisional payments will be off-set against the liability for normal tax for the applicable year of assessment

What steps must I take to work out the provisional tax due?

The amount of provisional tax payable is worked out on the estimated taxable income for that particular year of assessment, as follows:

• The First Period:
  • Half of the total estimated tax for the full year;
  • Less the employees tax for this period (6 months);
  • Less any allowable foreign tax credits for this period (6 months).
• The Second Period:
  • The total estimated tax for the full year;
  • Less the employees tax paid for the full year;
  • Less any allowable foreign tax credits for the full year;
  • Less the amount paid for the first provisional period.
• The Third Period (voluntary):
  • The total tax estimated payable for the full year;
  • Less the employees tax paid for the full year;
  • Less any allowable foreign tax credits for the full year;
  • Less the amount paid for the 1st and 2nd provisional tax periods.

Additional help on how to work out the amounts due.

Top Tip: Remember that, by submitting the return and payment timeously and accurately, you can ensure a hassle-free, smooth submission. Insufficient payment and/or underestimation of taxable income may lead to you being charged with penalties and interest.

Tax relief measures at SARS