What is provisional tax? Provisional tax is normal tax apportioned throughout the tax year. Payments are due twice within a tax year. The first provisional payment is due within the first six months of the tax year, and the second at the end of the tax year. The second provisional tax estimate and payment for the 2024 tax year is due by 29 February 2024. There is also the option of a third payment after the tax year should an amount be outstanding before a person’s tax return is submitted.
A provisional taxpayer typically includes someone who receives income from sources other than, or in addition to employment income, for example, interest, dividends, foreign dividends and/or rental from the letting of fixed property, and when added together, exceeds taxable income of R30 000 per tax year. Accordingly, you must annually assess whether you qualify as a provisional taxpayer.
Every taxpayer who qualifies as a provisional taxpayer is required to accurately calculate and submit a compulsory provisional tax return (IRP6 return) reflecting the taxpayer’s total estimated taxable income for the relevant tax year. It is important that these figures accurately reflect your financial position, as any underestimation of income may lead to the imposition of an underestimation penalty.
If you have a provisional tax liability due for the second provisional tax estimate for the 2024 tax year, payment is due no later than 29 February 2024. Generally, the banks have a cut-off time of 12:00 p.m. (noon). However, you will need to confirm with your bank regarding their specific cut-off times. SARS may impose a late payment penalty equal to 10% of the tax liability due if payment is not reflected in their account on 29 February 2024.
In addition to the penalties, SARS will levy interest on outstanding amounts due to them. As always, consult a tax advisor if you are unsure about your provisional tax status