Provisional Tax in South Africa: A Freelancer's Complete Guide
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If you earn income outside of a regular salary — freelancing, rental income, investment returns above R30,000, or business profits — you are likely a provisional taxpayer. Provisional tax is not a separate tax; it is a mechanism for paying your income tax in advance throughout the year.
The Two Payment Periods
Provisional taxpayers pay tax in two compulsory instalments: the 1st period payment (50% of estimated annual tax) is due by 31 August, and the 2nd period payment (100% minus what you already paid) is due by 28/29 February. A voluntary 3rd payment can be made by 30 September of the following year if you underestimated.
How to Estimate Your Income
Estimate conservatively. Include all income sources: freelance fees, rental income, interest above the exemption, crypto gains, foreign income, and dividends from unlisted companies. Underestimating by more than 10% can attract penalties of up to 20%.
PAYE Credits
If you also earn a salary with PAYE deductions, you can subtract the PAYE already deducted from your provisional tax liability. Many provisional taxpayers only owe the difference between their total tax liability and their PAYE.
Common Mistakes
Forgetting rental income. Not declaring cryptocurrency gains. Assuming interest below R23,800 is not taxable (it is exempt, but if you have other provisional income you still need to file). Not adjusting estimates when income changes mid-year.