Missing a provisional tax deadline can be stressful, particularly when you realise that penalties and interest may already be accumulating.
The most important thing is not to ignore the problem.
If you have missed an IRP6 submission or provisional tax payment, the best approach is generally to determine what should have been submitted and paid, correct the position as soon as possible, and then establish whether any penalties or interest need to be addressed.
Waiting for SARS to eventually identify the problem can make the situation more complicated.
What Are the Provisional Tax Deadlines?
For individuals and businesses with a February year-end, the two compulsory provisional tax periods are generally:
First provisional period: End of August
Second provisional period: End of February
There is also an optional third or top-up payment, generally due by the end of September for February year-end taxpayers.
If your company has another approved financial year-end, its deadlines will be calculated according to its own year of assessment.
What If I Missed the Payment Deadline?
SARS can impose a 10% late-payment penalty on provisional tax paid late for the first and second provisional periods.
Consider a simple example.
Suppose you should have paid:
R50,000
in provisional tax by the applicable deadline.
A 10% late-payment penalty could add:
R5,000
to the amount owing.
This is before considering any applicable interest.
A relatively short delay can therefore create a meaningful additional cost.
Can SARS Charge Interest as Well?
Yes.
Interest can potentially be charged on late or underpaid provisional tax.
The applicable SARS interest rate can change over time, so taxpayers should not rely on an old percentage remembered from a previous tax year.
This means delaying payment can potentially increase the eventual cost.
If you already know that tax is outstanding, paying the amount as soon as the position has been properly calculated can therefore be important.
What If I Submitted the IRP6 but Forgot to Pay?
Submitting the provisional tax return and paying the provisional tax are two separate parts of the process.
You can therefore have a situation where:
IRP6 submitted: Yes
Payment made: No
The fact that the return was submitted does not mean the tax has been paid.
If this has happened, determine the amount outstanding and arrange payment using the correct SARS payment details and reference.
What If I Paid but Didn’t Submit the IRP6?
The reverse can also happen.
A taxpayer may make a payment but fail to submit the provisional tax return.
This should also be corrected.
SARS requires provisional taxpayers to submit the applicable first and second IRP6 returns, including where the calculated amount payable is nil.
Do not assume that making a payment automatically completes the return-submission obligation.
What If My Provisional Tax Was Nil?
A nil payment does not necessarily mean that you can ignore the IRP6.
If you are liable to submit provisional tax and your calculation results in R0 payable, the relevant return may still need to be submitted.
This is an important distinction:
No payment due does not necessarily mean no return due.
Missing the Second IRP6 Can Be Particularly Serious
The second provisional tax return deserves special attention.
SARS states that if a provisional taxpayer does not submit the final estimate—the second IRP6—by the relevant due date, special rules apply.
Importantly, if the second IRP6 is not submitted within four months after the end of the relevant year of assessment, the taxpayer can be deemed to have submitted an estimate of nil taxable income.
That can have significant consequences when SARS later determines the taxpayer’s actual taxable income.
This is one reason you should not simply decide:
“I’ve missed February, so I’ll sort it out when I submit my annual tax return.”
The provisional tax obligation should be addressed separately.
Could I Face an Underestimation Penalty as Well?
Potentially.
Late payment and underestimation are different issues.
A taxpayer might therefore face consequences because:
- The payment was made late; and/or
- The second provisional taxable-income estimate was inadequate.
SARS’s underestimation rules depend partly on the taxpayer’s actual taxable income.
For taxable income of R1 million or less, the relevant test involves 90% of actual taxable income and the basic amount.
For taxable income above R1 million, the second estimate generally needs to reach at least 80% of actual taxable income to avoid the relevant underestimation penalty calculation.
The penalty calculation can be significant, so a late second provisional return should be dealt with carefully.
I Missed the Deadline Yesterday. Should I Wait?
Generally, no.
Missing a deadline does not mean there is now no reason to act quickly.
There is an important difference between:
“The deadline has passed.”
and:
“I’ll leave this unresolved for another six months.”
Once you discover the problem, establish:
- Whether an IRP6 should have been submitted.
- What taxable-income estimate should reasonably have been used.
- What provisional tax should have been paid.
- Whether the return can now be submitted.
- What payment should now be made.
- Whether penalties or interest have arisen.
Correcting the problem sooner also gives you a clearer picture of your overall SARS position.
Step 1: Get Your Accounting Information Up to Date
Before guessing at a figure, gather the information needed to prepare a reasonable calculation.
For a business, this might include:
- Sales and turnover
- Business expenses
- Payroll information
- Debtors and creditors
- Rental income
- Interest income
- Freelance or consulting income
- Capital gains
- Other taxable income
- PAYE already deducted
- Previous provisional tax payments
If your bookkeeping is behind, bring it up to date as far as reasonably possible.
Replacing one mistake with an inaccurate estimate is not a good solution.
Step 2: Calculate What Should Have Been Submitted
Prepare the provisional tax calculation for the relevant period.
For a first provisional return, this requires a reasonable estimate of taxable income for the entire tax year based on information available at that stage.
For a late second provisional return, substantially more complete annual information should normally be available.
Do not simply enter an arbitrary amount to get the return submitted.
Step 3: Submit the Outstanding IRP6
Provisional tax returns can be managed through SARS eFiling.
Make sure you are dealing with the correct:
Taxpayer
Tax year
Provisional period
Submitting an IRP6 against the wrong period can create additional administrative problems.
Step 4: Pay the Outstanding Amount
Once the liability has been calculated, arrange payment using the correct SARS payment reference.
SARS provides payment options including eFiling, electronic funds transfer and approved banking channels.
Take banking cut-off times into account.
A payment instruction created at the last moment is not necessarily the same as money reaching SARS on time.
Step 5: Check the SARS Account Afterwards
Do not assume that everything has been correctly allocated simply because you made a payment.
Check the taxpayer’s SARS position afterwards to ensure that:
- The return reflects as submitted
- The payment has been allocated
- The correct tax period was used
- Any penalty has been identified
- Interest has been identified
- No other provisional tax period remains outstanding
Keeping proof of payment and copies of the calculations is also advisable.
What If I Used the Wrong Payment Reference?
Payment allocation problems can happen.
If money has been paid but is not appearing against the correct provisional tax liability, investigate the allocation rather than simply making another payment without understanding what happened to the first one.
SARS payments rely on the appropriate payment reference information.
Keep your banking confirmation and SARS payment information so that the transaction can be traced if necessary.
Can I Ask SARS to Remove a Penalty?
In certain circumstances, it may be possible to request remission of a penalty.
This does not mean that SARS will automatically cancel a penalty because the taxpayer asks.
The circumstances surrounding the non-compliance matter.
Where a taxpayer believes a late-payment penalty or related interest should not have been imposed, SARS provides processes for requesting remission and, where applicable, taking the matter further through the objection and appeal processes.
Supporting information can therefore be important.
Don’t Ignore a SARS Penalty Notice
If SARS has already imposed a penalty, read the notice carefully.
Determine:
- What penalty has been imposed
- Which tax period it relates to
- Why SARS imposed it
- Whether the underlying return is outstanding
- Whether tax remains unpaid
- Whether the SARS calculation appears correct
- Whether legitimate grounds exist to request remission or dispute the amount
Simply paying a penalty without understanding why it arose may leave the underlying compliance problem unresolved.
Likewise, disputing a penalty does not necessarily remove the need to submit an outstanding return.
What If I Can’t Afford the Tax?
Cash-flow problems do not make the tax liability disappear.
If the business cannot pay the full amount immediately, the first step should still be to establish the correct tax position.
Do not reduce taxable income artificially simply to produce an affordable provisional tax figure.
Depending on the circumstances, SARS has processes for dealing with tax debt, including possible payment arrangements where the applicable requirements are met.
This should be addressed as a tax-debt and cash-flow issue, not by submitting incorrect information.
Can the Third Provisional Payment Fix a Missed Second Payment?
Not automatically.
The optional third payment can be useful where a taxpayer discovers after year-end that the first two provisional payments were insufficient.
It can help manage interest on an outstanding tax liability.
However, it does not simply erase the consequences of:
- Missing the second IRP6
- Paying the second provisional tax late
- Submitting an inadequate second estimate
Each issue needs to be considered separately.
Keep a Record of Why the Deadline Was Missed
If unusual circumstances caused the late submission or payment, keep evidence.
For example:
- Serious eFiling problems
- Banking problems
- Incorrect SARS information
- Exceptional business circumstances
- Relevant correspondence
- Proof of attempted payment
- Supporting accounting records
Whether these circumstances provide grounds for remission depends on the applicable rules and facts.
But if you later need to explain what happened, contemporaneous evidence is much more useful than trying to reconstruct the situation months later.
How to Avoid Missing the Next Deadline
Once the immediate problem has been corrected, put a process in place for the next provisional period.
A practical system could include:
Six weeks before the deadline: Make sure bookkeeping is current.
One month before: Review year-to-date income and expenses.
Two weeks before: Prepare the taxable-income estimate.
One week before: Finalise the IRP6 calculation and arrange funds.
Before the deadline: Submit the return and make payment.
After payment: Confirm that the payment has been correctly allocated.
This turns provisional tax from an emergency into a planned financial process.
Missed Your Provisional Tax Deadline?
The worst response to a missed SARS deadline is usually to ignore it and hope it can be dealt with at the end of the year.
Boatwright Consulting can assist with reviewing outstanding provisional tax periods, preparing late IRP6 submissions, calculating amounts payable and assessing penalties or interest that may have arisen.
Where appropriate, we can also assist in determining the next steps where SARS has already imposed a penalty.
Contact Boatwright Consulting if you have missed a provisional tax submission or payment deadline. The sooner the position is reviewed, the sooner you can understand what is outstanding and what needs to be corrected.
This article provides general information and should not be regarded as tax advice specific to your individual circumstances.