All companies and sole proprietors are obliged by the income tax act to submit provisional tax returns.

When do I have to submit?

These returns have to be submitted twice a year. The first one is 6 months into the financial year and the second one is in the 12th month of the financial year.

How is provisional tax calculated

If a company has a February 2025 year end, the first calculation will be based on the actual figures from 1 March 2024 to 31 August 2024. The sales and expenses will be multiplied by 2 to cover the whole year. The tax then has to be calculated on this profit amount. The tax payable amount will then be divided by two to pay the portion for 6 months.

In February 2025, the second return has to be submitted. By this time, you should be able to calculate the income and expenses for the period 1 March 2024 to 28 February 2025 more accurately. The tax payable should then be calculated on this profit. After it is calculated, subtract the amount paid during the first provisional tax form. This amount must then be paid over to SARS.

During the calculation, remember to take year end journals, such as depreciation into account. Also remember to include any accumulated losses from previous years.

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