What is provisional tax? How and when do I pay it?
Provisional tax is paid twice a year manually by individuals who earn non-salary income
What is provisional tax?
Provisional tax is paid by people who earn income other than a salary / traditional remuneration paid by an employer.
If you earn non-salary income, for example rental income from a property, interest income from investments or other income from a trade or small business you run, you will be a provisional taxpayer, even if you ALSO earn a salary. Some exceptions and thresholds do apply though.
If you just earn a salary then you are a regular taxpayer and don’t have to worry about filing provisional tax returns!
When do I have to pay it?
One payment by end of August (mid tax season)
A second payment by end of February (end of tax season)
*Optional* third payment at end of September (seven months after tax season closes) ONLY if amount paid in previous payments was insufficient.
Provisional payments due for the 2019 tax year:
Regular taxpayers make their tax contributions to SARS monthly via PAYE deducted off their paycheck automatically and submit one tax return every year for the end of February to describe their affairs – an ITR12.
Since provisional taxpayers earn money from other sources, they have to complete an IRP6 return AND make manual payments to SARS.
SARS wants provisional taxpayers to have an even cash flow and avoid paying one large (potentially crippling) chunk of tax in February, so they ask that two (or optionally three) payments are made during the tax year at the end of August and end of February, with an IRP6 required for each one.
The tax paid from the first and second payments is then credited against any tax owing at the end of tax season, and can be refunded by SARS if too much was paid.
Provisional taxpayers also need to submit an ITR12 tax return (just like regular taxpayers), except the due date for this is 31 January the following year (11 months after the tax season closed).
How do I register as a provisional taxpayer?
You can either apply as a provisional taxpayer when you first register for a tax number with SARS, or make the change on your SARS eFiling profile. Alternatively you can visit your nearest SARS branch in person or call the call centre on 0800 00 7277 (0800 00 SARS).
How do I complete the IRP6 form on SARS eFiling?
If you do not make use of SARS eFiling to file your returns, you can visit your nearest SARS office and complete the return there, with assistance from the staff. The quickest way to file is via eFiling and these instructions are below:
STEP 1: Login to your eFiling profile
Go to www.sarsefiling.co.za.
On the top right-hand corner you will see Register and Log in.
Click Log in and then type in your unique username and password – you will have decided on these when you registered for eFiling.
Didn’t register yet to E File? Register your profile quickly at www.sarsefiling.co.za using your tax number.
If you used to use a tax practitioner and they did this for you, you must request your SARS eFiling login details from them – they belong to you!
Otherwise call SARS ZA on 0800 00 7277 (0800 00 SARS), provide your ID number and some other security details and they will restore access to your eFiling.
Then click Login.
STEP 2: Generate the IRP6 return
Make sure that your name appears at the top under Taxpayer List just in case you have logged onto someone else’s SARS eFile page!
If the title of the page is not INCOME TAX WORK PAGE then click the RETURNS button in the menu at the top of the page.
In the menu on the left Returns Issued will open, showing Personal Income Tax (ITR12) and Provisional Tax (IRP6) – click Provisional Tax (IRP6).
The page title will now be PROVISIONAL TAX WORK PAGE and should show the IRP6 returns you are busy with.
If you have already created your IRP6 provisional tax return for the relevant year (it should be listed), jump to STEP 3 below.
Otherwise, select the year and relevant period (01 is the payment due at end of August and 02 is the second payment due end of February) from the drop down selector box on the right hand side of the page and click Request Return.
This tells SARS you would like to complete a return for that period and they generate it for you.
Important: You are filing a return for the tax year you are currently in, the one that ends in the coming month of February.
For example, if filing for period 01 in August of 2018, you will select 2019-01 (the 2019 tax year).
STEP 3: Start work on your IRP6 return
Click on the relevant IRP6 and then complete the form with the help of the explanations below.
When you are finished, click the File button to submit.
To make payment to SARS, click the Make Payment button and follow the instructions.
Understanding each section of the IRP6 on eFiling
Particulars of Taxpayer – will already be completed. Check to ensure that these are still correct.
Period – ensure that the correct period is checked – first period / 01 is 31 August 2018 for the 2019 tax year.
Turnover – GROSS INCOME: total business income, royalties, dividends, interest and all other income, including employment income. Exclude all retirement lump sums.
Important: In August, this is your ESTIMATED full amount that you expect to have made for the whole tax year at year end – not the amount you have earned to date over 6 months. In February this amount can be corrected based on your actual recorded income.
Estimated taxable income – all your income minus the business-related expenses incurred in earning that income. Also subtract any pension fund, retirement annuity fund contributions, donation deductions and any exempt income.
Tax on estimated taxable income – this amount will automatically calculate.
Less: Rebates (for individuals only) – depending on your age this amount will already appear on the return.
Less: Medical scheme fees (for individuals only) – this is a credit that goes toward providing relief if you or your employer pay for a private medical scheme. For the 2019 tax year this amounts to R310 per month for the first two members and R209 per month for every member thereafter. For the 2018 tax year this amounts to R303 per month for the first two members and R204 per month for every member thereafter. See our medical aid credits calculator.
Less: Additional medical expenses (for individuals only) – if your medical aid costs exceed 4x the above medical credit (3x if you are over 65) then a portion of your costs PLUS Out of Pocket Medical expenses can be claimed here as a credit.
Tax for the full year – will automatically calculate based on the tax tables.
Tax for this period (6 months) – this amount will automatically calculate and then divide by 2.
Less: Employees tax for this period (6 months) – add up all the employees tax your business paid from all the pay slips. Only add the PAYE. Do not include PAYE on Lump Sums, UIF or SDL.
Less: Foreign tax credits for this period (6 months) – if you earned money from overseas and any tax was withheld or paid, include that amount here.
Tax payable for this period – this amount will automatically calculate.
Add: Penalty on late payment – this amount will automatically calculate.
Add: Interest on late payment – this amount will automatically calculate.
Total Amount Payable – this amount will automatically calculate.
Historical information – this will already be completed based on your previous year’s income.