First period
Due six months after the start of the year of assessment. Individuals with a February year-end generally submit and pay by the end of August.
What is provisional tax? A practical Orion Moon guide for South African business owners.
Provisional tax is not a separate tax. It is a system that allows SARS to collect income tax during the year instead of waiting for the final annual assessment. The taxpayer estimates total taxable income for the full year, submits an IRP6 provisional tax return and pays the calculated amount after deducting PAYE and provisional tax already paid.
The provisional payments are credited against the final income-tax liability. When the annual ITR12 or ITR14 return is assessed, SARS compares the final tax with PAYE, provisional tax and other credits. The assessment may result in additional tax payable or a refund.
A person does not automatically become a provisional taxpayer merely because every small amount of non-salary income is received. The definition contains exclusions, including certain individuals who do not carry on a business and whose taxable non-remuneration income remains within the applicable limits. The taxpayer’s complete income position must be reviewed.
Due six months after the start of the year of assessment. Individuals with a February year-end generally submit and pay by the end of August.
Due on the last day of the year of assessment. Individuals and February year-end companies generally submit and pay by the end of February.
An optional top-up payment used to reduce interest where the first two payments are lower than the final tax. For February year-ends, this is generally due by the end of September.
Companies with a financial year other than February use dates linked to their own year: the first IRP6 is due six months into the financial year, the second at year-end and the voluntary top-up within the applicable period after year-end.
The first IRP6 estimates taxable income for the entire year—not only income earned during the first six months. The estimate should consider expected revenue, allowable expenses, taxable benefits, investment or rental income and other adjustments for the full year.
The second estimate is prepared at the end of the tax year, when more accurate financial information should be available. It is important because underestimation penalties are generally tested using the second-period estimate.
The basic amount is generally based on taxable income from the taxpayer’s most recent preceding assessment, subject to statutory adjustments and timing rules. It can provide a safe reference point, but it is not automatically the best estimate. If income has grown substantially, relying only on an old assessment may leave the taxpayer underpaid and exposed to interest or an underestimation penalty.
The second provisional estimate must be reasonable and supported by the information available when it is submitted. The penalty test depends on the final taxable-income level:
A deliberate low estimate is not a cash-flow strategy. Maintain calculations, management accounts and evidence supporting the estimate, especially where income declined or unusual expenses affected the result.
The IRP6 return and payment must both be completed by the relevant date. A return submitted without payment does not settle the liability. Late payment can attract a percentage-based penalty and interest, while failure to submit accurate estimates can create additional consequences on assessment.
A consultant earns a salary subject to PAYE and also earns material consulting income outside employment. For the first IRP6, the consultant estimates total annual salary, consulting profit, investment income and allowable deductions. Tax is calculated on the estimated total taxable income, after which expected PAYE is deducted.
At the end of February, actual consulting income and expenses are updated. The second estimate is revised using year-end records, the first provisional payment and total PAYE. If the final ITR12 later shows more taxable income than estimated, the remaining tax is payable on assessment and the second estimate is tested for underestimation.
Orion Moon prepares provisional-tax calculations using current accounting records, forecasts and the taxpayer’s wider income position. We review the basic amount, calculate the first and second IRP6 payments, identify possible underestimation exposure and provide the payment details and deadlines. Where bookkeeping is maintained by Orion Moon, the provisional estimate can be connected directly to current management information rather than prepared from incomplete figures.
No. It is income tax paid in advance. The payments are credited when the annual income-tax return is assessed.
If the taxpayer is required to submit the provisional return, the IRP6 obligation can still apply even when the calculation results in no payment.
Only if it remains a reasonable estimate of the full year. The second period should use updated year-end information and is particularly important for underestimation penalties.
No. Provisional taxpayers still submit the applicable annual ITR12, ITR14 or other income-tax return.