This article aims to provide practical planning tips that you can action now to submit an accurate second provisional tax return and make the right payment by 28 February.
1. Confirm whether the 28 February deadline applies to you
For taxpayers with a year of assessment ending in February, the second provisional payment is due no later than the last business day of February. In practice, that means 28 February for most individuals.
If your year end is different, your second provisional payment is due on the last day of your year of assessment, and your first payment is due within six months from the start of that year.
2. Treat the second provisional estimate as a forecasting exercise, not a thumb suck
The second provisional return is where SARS expects your best estimate of taxable income for the full year. A rushed estimate can create two problems:
- you overpay and strain cash flow unnecessarily
- you underpay and expose yourself to penalties and interest
SARS is clear that underestimation, or insufficient payment, can trigger penalties and interest.
A good estimate is built from real data. At this point in the year, you generally have enough information to produce a credible forecast. We recommend the following practical approach:
- start with year-to-date management accounts, or a draft set of financials
- add a realistic forecast for the remaining period, even if it is only one month
- adjust for once-off transactions and tax items that accounting profit does not always highlight.
3. Do not forget the usual provisional tax blind spots
Underpayments often come down to one of these being missed:
Capital gains
If you sold shares, property, crypto assets, or any investment during the year, the taxable portion of the capital gain should be included in your provisional tax calculation. The taxable portion of the aggregate capital gain for the current year must be included in both the first and second provisional tax calculations.
Rental income and related deductions
Common issues include:
- forgetting to include rental income earned but not yet received, depending on your facts and accounting basis
- claiming repairs that SARS may view as capital in nature
- missing allowances that may be available on qualifying assets
Foreign income and foreign tax credits
If you have foreign interest, dividends, services income, or capital gains, make sure they are included correctly, and that any foreign tax credits are supported by documentation. SARS includes foreign tax credits in the mechanics of the provisional tax calculation.
Variable remuneration and bonuses
Many employees are not provisional taxpayers, but if you earn significant variable income, allowances, or income from an employer not registered for employee tax, provisional tax may apply.
If you are already a provisional taxpayer, a bonus paid late in February can materially change your taxable income estimate.
4. Understand the underestimation penalty risk before you submit
The underestimation penalty is not triggered by a small difference. A penalty may apply where actual taxable income exceeds the taxable income estimated on the second provisional return. The calculation of the penalty differs depending on whether taxable income is above or below R1 million:
- if your taxable income is above R1 million, the estimate typically needs to be at least 80 percent of actual taxable income to avoid the underestimation penalty, subject to the specific rules and exclusions.
- if your taxable income is R1 million or less, the rules are different and interact with the basic amount concept.
This is why a defensible forecast matters. It is not only about paying more or less now – it is also about avoiding a penalty later.
5. Use the third provisional payment strategically if needed
Many taxpayers miss a powerful planning tool: the voluntary third provisional payment. SARS confirms that a third payment is optional after the end of the tax year, but before assessment, and it is often used to reduce interest on underpayment. It is important to note that it does not reduce or eliminate any underestimation penalty.
For February year-ends, the voluntary payment is typically due by the last business day of September.
If February cash flow is tight, you can still submit a realistic estimate, pay what is feasible now, and then consider a top up by September once your final results are clearer. This can reduce interest exposure, provided the rules and timing are managed carefully.
6. Submit on time, even if the amount due is nil
Provisional taxpayers must submit a provisional return for each period, even if the calculated amount payable is nil.
Late submission creates its own risks. If the final provisional return is not submitted within four months after year-end, the taxpayer is deemed to have submitted a nil estimate. In other words, missing the filing can be more damaging than submitting with a reasonable estimate and correcting later within the rules.
7. Get the admin right: payment timing, reference numbers, and cut-off times
Operational mistakes are common in February, especially when payments are made close to the deadline. Keep in mind that payments can be made via eFiling, EFT, or at participating banks, depending on your profile and method.
If you pay electronically, allow for bank cut-off times and clearance periods, which can take between two and five days. If the payment due date falls on a weekend or public holiday, SARS expects payment on the last working day before that date.
Use this quick checklist as a final run through before you submit:
- Confirm you are a provisional taxpayer and that the second period deadline applies to you
- update your full-year taxable income forecast using current numbers
- include capital gains and other once-off transactions
- factor in rental, investment, and foreign income, and ensure credits are supported
- sanity check your estimate against the underestimation penalty thresholds and basic amount rules
- submit the IRP6 on time, even if the amount payable is nil
- make payment early enough to clear, and use the correct payment reference details
- if needed, diarise September for a voluntary top up to reduce interest.
How we can help
Provisional tax planning is most effective when it is integrated with your wider tax position, including year-end tax adjustments, capital gains planning, and cash flow forecasting.
If you would like support with preparing an estimate you can stand behind, or if you are concerned about penalties or interest exposure, our tax team can help you model scenarios, quantify the risk, and submit your tax return with confidence.
