Determination if an Individual is a Provisional Taxpayer
To determine whether an individual is a provisional taxpayer, you must apply the definition of “provisional taxpayer” in paragraph 1 of the Fourth Schedule to the Income Tax Act (also discussed in SARS Interpretation Note IN 1 on provisional tax .
## 1) Start with the general rule (when an individual *is* a provisional taxpayer)
An individual is a provisional taxpayer if they derive income by way of—
1. Remuneration from an employer that is not registered for employees’ tax (PAYE) purposes (paragraph 15), or
2. Any amount which does not constitute remuneration (i.e. income other than salary-type remuneration), or
3. They are notified by the Commissioner that they are a provisional taxpayer .
Interpretation Note IN 1 also confirms that a person earning only remuneration (salary/wages/bonuses/pension) generally pays tax through PAYE and would generally not be a provisional taxpayer .
## 2) Then check the key exclusion that often applies to individuals
Even if an individual earns non-remuneration amounts, they are excluded from being a provisional taxpayer if all of the following apply :
- They are a natural person; and
- They do not derive income from carrying on any business; and
- Either:
- their taxable income will not exceed the annual tax threshold, or
- the portion of their taxable income derived from interest, dividends, foreign dividends, rental from letting fixed property, and any remuneration from an unregistered employer, is R30,000 or less .
## 3) Practical checklist (quick decision)
An individual is likely a provisional taxpayer if, during the year, they have (for example):
- Self-employment / business income (they are “carrying on a business”), or Always a provisional taxpayer even if the income is below R30k
- Rental income (and the exclusion above does not apply), or
- Other non-remuneration income significant enough that they do not fall within the “tax threshold / R30,000” exclusions, or
- Salary from a foreign/unregistered employer (no PAYE registration) .
An individual is generally not a provisional taxpayer if:
- They earn only PAYE salary-type remuneration, and they are not specifically notified by SARS .
## 4) If you want, give me these facts and I’ll classify them
To apply the above properly, tell me:
1) What income sources they have (salary only vs business/rental/investments),
2) Whether the employer is PAYE-registered, and
3) Rough amounts (especially the “passive income” amounts vs the R30,000 limit).
Source document used: SARS Interpretation Note – *LAPD-IntR-IN-2012-01-Provisional-Tax-Estimates (IN 1)* .
