The provisional tax dates that catch businesses out.

July 2026 · By Kagiso Skhosana, Partner — Tax & Accounting

Provisional tax is not a separate tax — it is simply prepaying your income tax during the year instead of in one painful lump at assessment. The system is reasonable. The penalties for getting it wrong are not. And almost all of them are triggered at the second period.

The three dates that matter

For a company with a February year-end (the most common in South Africa), the provisional tax calendar looks like this:

• First period — 31 August: an IRP6 return and payment based on an estimate of the full year's taxable income, at the halfway mark.
• Second period — 28/29 February: the one that counts. Your estimate for the full year, less what you paid in August. This is where underestimation penalties are born.
• Third (voluntary) top-up — within six months of year-end (end September for February year-ends): not compulsory, but paying any shortfall here stops interest running on it.

Different year-ends shift the dates — the pattern is always six months into the year, at year-end, and six months after — but the logic is identical.

The basic amount — and why it is not always a safe harbour

SARS lets you anchor your estimate to the basic amount: your last assessed taxable income, increased by 8% per year if that assessment is older than 18 months. Many businesses file on the basic amount reflexively, assuming it protects them. It only partly does.

If your actual taxable income for the year comes in at R1 million or less, your second-period estimate is safe if it was at least the lower of the basic amount or 90% of the actual figure. But if your taxable income exceeds R1 million, the basic amount gives no shelter at all: your estimate must be at least 80% of actual taxable income, or SARS may levy a 20% penalty on the shortfall.

That is the trap. A business that grew strongly during the year — precisely the business we want to see — files its second period on last year's assessed income, finishes the year well above R1 million, and lands a penalty for underestimation on top of the tax it already owes.

What it costs when it goes wrong

• Underestimation penalty: up to 20% of the shortfall between what you should have paid on 80% (or 90%) of actual taxable income and what you actually paid.
• Late payment penalty: a flat 10% if a provisional payment misses its date — even by a day.
• Interest: charged at the prescribed rate on underpayments, running until settled.

How to sanity-check your estimate before you file

• Pull up-to-date management accounts in January or early February — not last year's assessment — and annualise the actual results.
• Adjust for what accounting profit hides from taxable income: depreciation versus wear-and-tear allowances, provisions, prepaid income and non-deductible items.
• Ask the 80% question directly: "If the year ends where the management accounts say it will, is my estimate at least 80% of that number?"
• If cash is tight, remember: a documented, defensible estimate filed on time is repairable; a missed payment is an automatic 10%.
• Diarise the third top-up as a review point — if the final numbers moved after February, a September payment stops the interest clock.

The pattern behind every provisional tax penalty we are asked to fix is the same: the estimate was made from stale information. Which is really an accounting problem, not a tax one — and it is why our monthly management accounts and tax compliance work as one service, not two.

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