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If provisional tax feels confusing, you are not alone. Every February, many South African business owners and individuals anxiously Google it – and often realise a little too late that you cannot simply ignore it like that junk drawer you will “one day” sort out. Getting it right before year-end can save you from penalties, interest, and a very uncomfortable conversation with SARS.
If you are new to the concept, we will break it down for you (minus the jargon) so you know what matters and what actions to take.
Provisional tax is a system used by SARS to collect tax during the year, instead of waiting for a large lump sum after assessment. It primarily applies to individuals who earn income that is not purely salary-based, as well as companies and trusts.
Salary earners are taxed monthly through the Pay As You Earn (PAYE) system, where tax is automatically deducted from your salary before it reaches your bank account. In contrast, income outside of a salary is taxed through the provisional tax system, which is essentially SARS saying, “please pay as you go, based on what you expect to earn”.
The provisional tax system helps SARS manage cash flow and reduces the risk of large unpaid tax bills arising when final calculations are made.
If you earn income from a business, freelance work, rental properties, investments, or multiple sources, you are likely a provisional taxpayer. Many people only discover this once SARS has already issued a penalty. Don’t be one of them.
Provisional tax is paid in two to three instalments during the tax year (for example, the 2026 tax year, running from 1 March 2025 to 28 February 2026):
• First instalment: due by 31 August (in this case, 2025), based on your estimated taxable income for the year
• Second instalment: due by 28 or 29 February (in this case, 2026), when your estimate needs to be as accurate as possible
• Optional third instalment: payable by 30 September after year-end (in this case, 2026), to reduce interest if there is still a shortfall
Understanding these payment points makes it easier to plan cash flow and avoid surprises.
Provisional tax is calculated by estimating your total taxable income for the tax year and then applying the normal income tax rates to that estimate. It is not a separate formula or percentage.
Find more information from SARS here on how to work out what you need to pay.
The February provisional tax submission is your second and final compulsory provisional tax payment for the tax year. This is where SARS expects your income estimate to be realistic and defensible.
If your estimate is too low and falls outside SARS’ accepted thresholds, penalties can apply even if you pay the balance later. This is why February is the critical moment for review, not guesswork.
One of the biggest issues is the use of outdated figures. Business owners often rely on last year’s numbers or rough projections without checking current performance.
Another frequent problem is forgetting additional income streams, such as once-off consulting work or rental increases during the year.
We also see people assume their tax practitioner will “sort it out later”. By the time final assessments are issued, it is often too late to undo the damage.
SARS allows some flexibility, but not blind optimism. Your provisional tax estimate should be based on real data, such as management accounts, bank statements, or year-to-date figures. If your taxable income exceeds the basic threshold, SARS expects your estimate to be within a reasonable margin of the final outcome.
Accuracy matters far more in February than in the first provisional submission earlier in the year.
A proper provisional tax review before 28 February gives you clarity. It allows you to correct underestimations, plan cash flow, and avoid penalties. It also creates space for smart tax planning while there is still time to act.
Reviews are about compliance, foresight, and making informed decisions based on where your numbers actually stand.
February is late in the tax year, but not too late yet. With the right information and guidance, adjustments can still be made. The key is acting before submission deadlines pass.
If you realise you need tax assistance before the end of the financial year, or if you want to do a better job at planning provisional tax next year – you are not on your own. Our professional, experienced team at Huysamen Westraad Inc. can do the heavy lifting for you to ensure your tax situation is compliant, optimised, and set up to help you flourish financially, this year and beyond. Talk to us.
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