A provisional taxpayer is anyone SARS classifies as needing to pay tax in advance during the year, rather than having it fully settled through PAYE withholding. This typically includes companies, and individuals with income from a trade, investments, or other non-remuneration sources.
What it means
Because this income has no employer withholding it as it's earned, SARS requires the taxpayer to estimate their liability twice a year and pay it proactively, closing the gap that would otherwise only be settled once a year on assessment.
Where it fits in
An employee earning only a salary, with PAYE correctly withheld, is generally not a provisional taxpayer. Provisional taxpayer status typically applies alongside employment income when a person also has other income - freelance work, rental income or director's fees not already subject to PAYE.
Key rules
- Applies to companies and to individuals with material non-remuneration income.
- Pays estimated tax via the IRP6, twice a year.
- Distinct from an employee whose full income is covered by PAYE.
- Under-estimation on the IRP6 can attract penalties at assessment.
