Provisional Tax in South Africa: Business Owner's Guide

Provisional tax is advance tax payments made during the year to prevent a large tax bill at year-end. If you run a business or earn non-salary income, you likely need to pay provisional tax.

Who Must Register?

You must pay provisional tax if you:

Earn business/trading income

Receive rental income

Earn commission

Have freelance/consulting income

Receive director's fees

AND taxable income exceeds R30,000/year

Who is Exempt?

You're exempt if you:

Only earn salary income (PAYE covers you)

Are over 65 and taxable income is below threshold

Have no tax liability

Payment Schedule 2024/2025

Payment	Due Date	Percentage
1st Payment	31 August 2024	50% of estimated tax
2nd Payment	28 February 2025	Remaining balance
3rd Payment (Optional)	30 September 2025	Top-up if underestimated

How to Calculate Provisional Tax

Step 1: Estimate Taxable Income

Add up expected:

Business profit

Rental income

Investment returns

Other taxable income

Step 2: Deduct Allowable Expenses

Subtract:

Business expenses

Retirement contributions

Medical aid credits

Step 3: Apply Tax Tables

2024 Tax Brackets:

Taxable Income	Tax Rate
R0 - R237,100	18%
R237,101 - R370,500	R42,678 + 26% above R237,100
R370,501 - R512,800	R77,362 + 31% above R370,500
R512,801 - R673,000	R121,475 + 36% above R512,800
R673,001 - R857,900	R179,147 + 39% above R673,000
R857,901 - R1,817,000	R251,258 + 41% above R857,900
R1,817,001+	R644,489 + 45% above R1,817,000

Step 4: Calculate Payment

First payment: 50% of annual estimate

Second payment: Total tax minus first payment

Example Calculation

Annual business profit: R500,000

Tax calculation:

First R237,100 @ 18% = R42,678

Next R133,400 (to R370,500) @ 26% = R34,684

Remaining R129,500 @ 31% = R40,145

Total tax: R117,507

First payment (August): R58,754 Second payment (February): R58,753

Penalties for Non-Compliance

Late Payment

10% penalty on late amount

Interest at prescribed rate

Underestimation

If your estimate is less than 80% of actual tax:

20% penalty on shortfall

Failure to Submit

Criminal prosecution possible

Additional penalties

Tips to Avoid Penalties

Keep accurate records - Track income monthly

Estimate conservatively - Better to overpay slightly

Set aside monthly - Save ~30% of profit for tax

Use accounting software - Real-time profit tracking

File on time - Set calendar reminders

LEDGA Provisional Tax Help

LEDGA simplifies provisional tax:

Profit tracking - Know taxable income in real-time

Tax estimates - Automatic calculations

Deadline reminders - Never miss a payment

Payment history - Track what you've paid

Year-end prep - Records ready for submission