What is Provisional Tax?

PROVISIONAL TAX

Reference to the Act: paragraph 1, definition: “provisional tax”

Provisional tax forms part of the Pay-as-you-Earn (PAYE) system of tax collection. It is not a separate tax but merely a way of paying your income tax during the tax year the income is earned. It prevents large amounts being payable on assessment as it spreads the tax load over the tax year.

The payments, which are usually made in August and February, represent tax on income which has already been earned during that year and has not been taxed.

THE PROVISIONAL TAXPAYERS

Reference to the Act: paragraph 1, definition: “provisional taxpayer”

A provisional taxpayer is —

• Any person who derives income, other than remuneration, which
  exceeds R10 000 per annum, eg:

1. taxable investment income,



2. business income,



3. farming income, and



4. rental income.

Further more

• Any director of a private company, unless the Commissioner otherwise directs.



• Any member of a close corporation who ordinarily resides in the Republic, unless the Commissioner otherwise
  directs.



• Any company.



• Any other person notified by the Commissioner that he is a provisional taxpayer.

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