The basic amount for provisional tax is the taxable income shown on your most recent SARS notice of assessment (ITA34), with any taxable capital gain stripped out. SARS uses it as the minimum benchmark your provisional estimate should meet, and if the assessment it comes from is more than a year old, you must increase it by 8% for each full year that has passed.
Paragraph 19(1)(d) of the Fourth Schedule to the Income Tax Act sets the definition: the taxable income from the latest preceding year of assessment for which SARS issued a notice of assessment at least 14 days before your provisional tax estimate is due.1South African Revenue Service. Income Tax Interpretation Note 1 – Provisional Tax Estimates So it is not a fresh calculation. It is a figure SARS has already assessed, adjusted by two rules: capital gains come out, and old assessments get bumped up.
How to Work Out Your Basic Amount
Start with your latest ITA34 on eFiling, under your tax returns.2South African Revenue Service. FAQ – Where Do I Find My Notice of Assessment (ITA34) Take the taxable income figure and subtract any taxable capital gain that was included in it.3South African Revenue Service. Guide to Provisional Tax What remains is your starting point.
The capital gains exclusion is deliberate. A once-off gain from selling property or shares inflates your assessed income in a year that does not reflect your ongoing earnings, so the law removes it before setting your baseline. The result is a basic amount closer to your recurring income.
Then check the date. If SARS issued that assessment less than 14 days before your provisional payment is due, it does not count yet. Your basic amount stays based on the assessment before it. That protects you from being caught out by a last-minute reassessment.
The 8% Annual Increase for Older Assessments
Your basic amount does not stay frozen at whatever your last assessment showed. If that assessment relates to a year of assessment ending more than one year before your provisional estimate is due, you must increase the basic amount by 8% for each completed year that has elapsed.4South African Revenue Service. Guide for Provisional Tax
A worked example. Say your last assessed taxable income (excluding capital gains) was R400,000, from a year of assessment that ended two years ago. Increase R400,000 by 8% for the first year, which gives R432,000. Then increase that by another 8% for the second year, which gives R466,560. Your basic amount is R466,560. The escalation compounds, so a stale assessment pushes your baseline up faster than people expect.
The reason is simple: SARS assumes your income grows over time, and if you have not filed or been assessed recently, the law lifts your baseline to prevent chronic underpayment. Skipping this adjustment is one of the most common ways provisional taxpayers slip below the basic amount without realising it.
If You Have No Prior Assessment
First-time provisional taxpayers and newly registered businesses have no prior assessment to draw on. In that situation, the basic amount is effectively zero, and you estimate your taxable income for the year as accurately as you can. There is no statutory floor to meet, but SARS can still ask you to justify your estimate and can increase it if they consider it unreasonable — and that increase is not open to objection or appeal.3South African Revenue Service. Guide to Provisional Tax
Once your first full-year assessment comes through, that assessed income becomes your basic amount going forward, and the ordinary rules and the 8% escalation apply from then on.
Why the Basic Amount Matters: The 20% Penalty
The basic amount is not just guidance. It is a safe harbour against the underestimation penalty in paragraph 20 of the Fourth Schedule, and the safe harbour works differently depending on how much you earn.5South African Revenue Service. Interpretation Note 1 – Provisional Tax Estimates (Issue 3)
If your taxable income is R1 million or less, you avoid the 20% penalty as long as your second-period estimate is at least the basic amount, or at least 90% of your actual taxable income. Meeting either threshold protects you. Fall short of both and the penalty is 20% of the shortfall. On a R200,000 shortfall, that is R40,000.
If your taxable income is above R1 million, the test is tougher. The penalty applies whenever your estimate is less than 80% of your actual taxable income, and the basic amount does not give you a separate safe harbour at this level. High earners have to estimate their actual income carefully rather than lean on the basic amount.
For anyone under the R1 million line, though, matching the basic amount is often the simplest way to stay penalty-free even if the year turns out better than expected.
Where the Basic Amount Fits in Each Payment
The first provisional payment is due six months into the year of assessment (end of August for a February year-end). Your estimate for the full year should be at least the basic amount. If you think your income will genuinely be lower, you can submit a reduced estimate, but SARS may ask you to justify it and can increase it if they disagree.3South African Revenue Service. Guide to Provisional Tax
The second payment is due at the end of the year of assessment (end of February for most taxpayers). This is where the basic amount matters most, because the penalty test at the second period compares your final estimate against both the basic amount and your actual taxable income under the tiered rules above.
Whether You Even Need to Worry About This
The basic amount only concerns you if you are a provisional taxpayer. Most salaried employees are not. You become one when you earn income other than a salary from a tax-registered employer — freelance income, business profits, rental income, or investment returns above certain thresholds.6South African Revenue Service. Provisional Tax Companies are automatically provisional taxpayers.
You are excluded from the provisional tax system if your taxable income stays below the tax threshold, or if your only non-salary income (from interest, foreign dividends, rental, or an unregistered employer) totals R30,000 or less. Exempt interest — under R23,800 if you are under 65, or R34,500 if you are 65 or older — does not trigger provisional status by itself. Approved public benefit organisations, body corporates, share block companies, and deceased estates are also excluded.6South African Revenue Service. Provisional Tax
If none of those exclusions apply to you, the basic amount is the number that keeps you on the right side of SARS. Pull your latest ITA34, remove the capital gains component, apply 8% for each year that has passed since that assessment year ended, and use the result as the floor for your estimate.