Provisional Tax Status: Why You Should Check Twice a Year

16 Jul

This article will count 0.25 units (15 minutes) of unverifiable CPD. Remember to log these units under your membership profile.

Tax season comes with enough admin. But here's something many taxpayers may not realise: your provisional taxpayer status can change from one year to the next. It's not a permanent classification and misjudging it can come with consequences.

In this article, we will explain:

What it means to be a provisional taxpayer
The exemptions and thresholds that apply
What happens if you don’t submit IRP6 returns when required
The potential penalties and how to fix them.

Whether you're an individual taxpayer or an accounting professional, knowing how and when provisional status applies could save you time, stress, and money.

Who is a Provisional Taxpayer?

An individual is regarded as a provisional taxpayer if they earn income that is not subject to PAYE deduction. This includes income from rental, consulting, investments, or capital gains.

An individual is not regarded as a provisional taxpayer if their income is solely from remuneration from which employees’ tax has been deducted. Also excluded are individuals:

Under the age of 65, whose interest income is less than R23,800, or
Over the age of 65 whose interest income is less than R34,500, or
Whose income is only from tax-free savings accounts or exempt dividends (As per Section 10(1)(i) of the Income Tax Act).

It is important to note that if a provisional taxpayer realises a capital gain during the tax year, the capital gain must be included in the estimate for that period. On the other hand, if a taxpayer who is not a provisional taxpayer (i.e. earns only remuneration) realises a capital gain, it may be declared on submission of the ITR12.

SARS Notifications

SARS is mandated to notify taxpayers if they qualify as provisional taxpayers. However, the obligation to pay tax due on income received remains the responsibility of the taxpayer.

Who is Not a Provisional Taxpayer?

In terms of Paragraph 19 of the Fourth Schedule to the Income Tax Act:

The following persons are not provisional taxpayers:

Approved public benefit organisations
Recreational clubs approved under Sections 30 or 30a
Body corporates, share block companies, or certain exempt associations
Natural persons who do not carry on any business and whose taxable income:

Does not exceed the tax threshold (R95,750 if under 65; R148,217 if 65+ but under 75; and R165,689 if 75 and older), or
From interest, foreign dividends, rental or remuneration from an unregistered employer does not exceed R30,000.

Illustrative Example

Individual A (50 years old) earns R120,000 remuneration. Additionally:

Receives interest on a medical savings account of R550
Earns R60,000 interest from a bank
Earns R15,000 from a tax-free investment (exempt)
Earns R84,000 net rental income.

The total taxable interest earned is R60,550 (550 + 60,000 + Rnil (The Tax-Free Investment is fully exempt))

Less: Interest exempt (below 65) = R23,800

Taxable interest = R36,750

Plus: Net Rental Income = R84,000

Total non-remunerated income = R120,750 (R36,750 + R84,000).

After applying the R23,800 interest exemption, the non-salary income totals R120,750. This exceeds the R30,000 threshold, so the individual is regarded as a provisional taxpayer.

Four Key Points for Accountants and Taxpayers

There is no longer a requirement to register as a provisional taxpayer. If you meet the requirements, you are one. You may request an IRP6 to be issued.
Members of CCs and directors of companies are no longer automatically regarded as provisional taxpayers. In the past, directors of companies and members of close corporations were treated as provisional taxpayers by virtue of the office held. At this point, the Income Tax Act treats such office bearers as normal employees for PAYE purposes, and these office bearers would still be required to meet the definition of a provisional taxpayer above to qualify as such.
If a taxpayer who was not a provisional taxpayer in a prior tax year but currently satisfies the requirement to be a provisional taxpayer, does not have to register with SARS to become a provisional taxpayer formally. The taxpayer requests an IRP6 and completes the form.
If the taxpayer is already registered for eFiling and meets the criteria for being a provisional taxpayer, the tax practitioner can request the return type to be added to the taxpayer’s profile. This will enable online access and submission of the IRP6 return.
If an IRP6 was not submitted by the due date, SARS treats it as a nil submission. This may have significant consequences when the ITR12 is submitted.

When Does SARS Impose Administrative or Non-compliance Penalties?

If a taxpayer was previously regarded as a provisional taxpayer but did not submit an IRP6 because they no longer qualify as one, the ITR12 must be submitted by 20 October 2025. If it is submitted after 20 October (even before 19 January), SARS will impose an administrative penalty for not meeting the correct submission deadline.

This is because SARS can determine from the date of submission of the ITR12 that the taxpayer was aware of the due date. One can merely view the ITR-12 and determine whether a taxpayer is a provisional taxpayer. Therefore, SARS can easily determine that if the taxpayer submitted a tax return in January, and it should have been submitted by 20 October 2025 if the taxpayer did not currently meet the requirements of a provisional taxpayer, SARS will impose an administrative penalty.

It is the responsibility of the taxpayer or the tax practitioner acting on their behalf to determine whether the individual qualifies as a provisional taxpayer. This assessment must be conducted twice a year: at the end of August and again at the end of February.

Correction Procedure

Sometimes SARS systems make mistakes. For example, a provisional taxpayer who met all the criteria and submitted their 2024 ITR12 on time in January 2025 might still receive an incorrect administrative penalty.

If SARS incorrectly treats a provisional taxpayer as a non-provisional taxpayer and charges a penalty, the taxpayer (or their tax practitioner) can rectify the error by submitting a Request for Reduced Assessment (RRA01) on eFiling. This is a more straightforward way to ask SARS to correct the mistake, without needing to go through a full objection or appeal.

When submitting the RRA01, you must include a reason. In these cases, the reason should be: “processing error by SARS”. SARS must agree that the error was theirs and that the taxpayer was wrongly classified. This falls under section 93(1)(e)(iv) of the Tax Administration Act, which allows for corrections where SARS has made a processing mistake.