Provisional Tax Is Not Optional
When you stop receiving a payslip, your tax obligation doesn't disappear — it just moves. Employees have PAYE deducted monthly before they ever see the money. Freelancers and independent contractors receive gross income from clients and carry full responsibility for paying that tax themselves.
Provisional tax is the mechanism SARS uses to collect income tax in instalments throughout the year. It doesn't create a new liability — it distributes the one you already have. Missing it, or getting your estimates badly wrong, leads to penalties and interest that are entirely avoidable with basic planning.
Two Payments, Two Deadlines
Every provisional taxpayer makes two compulsory IRP6 submissions per tax year.
The first payment, due 31 August, is based on an estimate of your total taxable income for the year. SARS allows more flexibility here — you can base your estimate on your prior year's assessment if current-year figures aren't solid yet, and the accuracy rules are less strict at this stage.
The second payment, due 28 February, is where precision matters. By the end of February, you have eight months of trading information. SARS expects your estimate at this point to closely reflect your actual income. A significant underestimate at the second payment stage is what triggers the Paragraph 20 penalty.
There is also a voluntary third payment available after year-end, due 30 September. This lets you settle any remaining liability once your actual income is confirmed, and it reduces the interest that accumulates between your second payment and your final assessment. If you know your February estimate was conservative, this is worth using.
What Your Estimate Must Include
Your taxable income estimate covers everything you earn outside of PAYE employment: consulting fees, contract income, freelance project revenue, rental income, and any interest or investment income above the exempt thresholds. If you have employment income alongside freelancing, the non-PAYE portion is what goes into your provisional calculation.
From this, you can deduct allowable business expenses. For contractors, these typically include professional indemnity insurance, accounting and advisory fees, business travel with a logbook, professional subscriptions, qualifying home office costs, and equipment used in your work. SARS expects these to be genuinely incurred in the production of income — not personal costs reclassified as business expenses.
The s11F Deduction: The Largest Legal Reduction Available
Section 11F of the Income Tax Act allows contributions to approved retirement funds to be deducted from your taxable income. The annual limit is 27.5% of the greater of your remuneration or taxable income, capped at R350,000 per year.
For employed individuals, this limit works against salary. For contractors with no employer, it applies to your full taxable income — and it's fully accessible through a Retirement Annuity (RA).
Here is what that means in practice. If you project taxable income of R900,000 for the year, your s11F limit is R247,500 (27.5% × R900,000). Contributing that amount to a registered RA reduces your taxable income to R652,500 before the tax tables are applied. At the 36% marginal rate, that's a reduction in tax liability of roughly R89,000 — flowing directly into a lower IRP6 payment in February.
The timing matters. To maximise the s11F deduction for a given tax year, contributions need to be made between 1 March and 28 February of that same year. Starting monthly contributions from March gives you the full year to build toward the limit. Trying to back-fill in January or February is possible, but it requires a larger single payment with less cash-flow flexibility.
Many contractors on high incomes simply don't start an RA because they intend to "sort it out later." The result is that the full 27.5% allowance goes unused, and what should have been a retirement fund contribution goes to SARS instead.
Recordkeeping Is the Foundation
SARS can query any provisional tax return or annual assessment. If you cannot substantiate an estimate or a claimed deduction, the burden of proof sits with you. A disciplined recordkeeping habit from the start of each tax year saves time and removes audit exposure:
- Invoices issued, with payment dates and amounts received
- Bank statements covering the full tax year
- Receipts for all claimed business expenses
- A business mileage logbook if you claim travel costs
- Retirement annuity contribution certificates from your fund provider
- Third-party income certificates (interest, dividends where applicable)
This is straightforward to maintain if you do it as you go. Trying to reconstruct twelve months of records in February, with a payment deadline approaching, is how errors and omissions happen.