When people hear “provisional tax,” they often think it’s an extra tax.
Good news — it’s not. It’s simply a way of paying your normal income tax in advance.

Why does it exist?

If you’re an employee, your employer deducts PAYE from your salary every month and sends it to SARS.
But if you’re self-employed, own a business, earn rental income, have investments, or make money outside of a salary, SARS doesn’t get monthly deductions from you.
Provisional tax helps spread your tax payments over the year instead of paying one huge lump sum at year-end.

Who must pay provisional tax?

Provisional tax applies to both individuals and companies:

• Individuals – if you earn income other than a salary (e.g., from a business, freelancing, rentals, interest, investments, etc.).
  
• Companies / Close Corporations / Trusts – almost all are provisional taxpayers because they pay income tax as separate legal entities.
  

If you’re registered as a company, you’ll likely have to submit provisional tax returns, even if all your income is from one client.

When do you pay?

There are two main payments (and sometimes a third):

1. First payment – 6 months into your financial year - depending on your company's Year-End Date
   
2. Second payment – Before the last day of the tax year.
   
3. Third (optional) payment – Due 30 September (only if you didn’t pay enough in the first two payments to cover the final amount).
   

(For companies with a different financial year-end, these dates shift, but the same “halfway” and “year-end” principle applies.)

How is it worked out?

It’s based on your estimated taxable income for the year:

• We take your total income (sales, rentals, investments, etc.).
  
• Subtract allowable expenses.
  
• Apply the correct tax rate for individuals or companies.
  
• Divide the tax into two payments (with adjustments to match actual results).
  

At MFO, we help you estimate accurately so you don’t overpay or get hit with penalties.

What happens if you don’t pay or underpay?

SARS charges:

• Penalties for late payment.
  
• Interest on the shortfall.
  Sometimes both.
  

Businesses can also face compliance flags, making future SARS dealings more difficult.

How MFO can help

We:

• Calculate your provisional tax for individuals and companies.
  
• Advise on the best timing for expenses to legally reduce your tax.
  
• Submit and pay it on time via eFiling.
  
• Keep you in the loop so there are no surprise tax bills.
  

Bottom line:
Provisional tax isn’t an extra tax.
It’s simply paying your normal tax in smaller, manageable chunks — whether you’re a one-person business, a growing company, or an individual with extra income. With the right planning, it’s painless and predictable