PROVISIONAL TAX: THIRD PAYMENT AND PENALTY RISKS — WHAT YOU NEED TO KNOW
The third provisional tax payment is voluntary — but ignoring it could cost you in interest and penalties.
For individuals and companies with February year-ends, this payment is due by 30 September. For entities with other year-ends, it’s due six months after the tax year-end.
This top-up payment is a strategic opportunity to minimise interest and penalties on tax shortfalls not covered by the first two provisional payments.
⚠️ Why SARS May Penalise You
A penalty may be levied if your actual taxable income (as declared in your final tax return, ITR12) exceeds the estimated income submitted in your second provisional return (IRP6).
This is especially relevant if your estimate was too low — even unintentionally.
SARS applies different rules depending on your taxable income:
💼 Taxable Income of R1 Million or Less
You may face an under-estimation penalty if:
- Your second provisional estimate is less than 90% of your actual taxable income, and
- It’s also less than your ‘basic’ amount (your taxable income from your most recent assessment)
Penalty Calculation:
20% of the difference between the tax payable on your estimate and the lesser of:
- Tax on 90% of your actual taxable income
- Tax on your basic amount
💼 Taxable Income Greater Than R1 Million
SARS does not consider the basic amount.
Your second provisional estimate must be at least 80% of your actual taxable income.
Penalty Calculation:
20% of the difference between the tax payable on your estimate and the tax on 80% of your actual taxable income.
✅ What You Should Do
We recommend reviewing your previously submitted IRP6 returns for the relevant tax year. Compare these to your actual or best-estimate taxable income.
If there are discrepancies — such as:
- Deductions previously claimed that are no longer applicable
- Abnormal income fluctuations
IT3(T) SUBMISSION DEADLINE – 30 SEPTEMBER
SARS now mandates that ALL Trusts submit IT3(t) third-party returns, these returns are non-negotiable and will be used to cross-reference beneficiary, donor, and Trust tax submissions. Any inconsistencies may trigger penalties, audits, and reassessments.
The ITR3(t) for Trusts requires the following information:
- Full demographic details of the Trust and its beneficiaries
- Financial statements for the relevant year
- All taxable and non-taxable amounts vested in beneficiaries
- Details of loans, donations, and interest-free funding
- Reconciliation of all amounts reported/to be reported by the Trust, beneficiaries, and funders
SARS will compare all third-party returns to ensure that the correct parties are taxed and that no revenue is lost. Section 7C Donations Tax may apply to low-interest or interest-free loans, and donors must declare these amounts in their own tax returns.
The IT3(t)’s are due by September 30, the expectation is that Trustees must have finalised financial records by then. They also have to perform a reconciliation between amounts to be reported on the IT3(t) and amounts reported/to be reported by donors/funders, beneficiaries, and the Trust in their respective provisional tax returns, annual tax returns, and donations tax returns.
Trustees must keep proper systems in place to manage the required information effectively. With SARS’ renewed focus on the compulsory application of rules to avoid SARS to be out of pocket and to reduce Trustee from blindly distributing all income and capital gains to beneficiaries who paid little or no tax.
The submission includes amounts attributed to donors/funders – it is a misconception that the IT3(t) only deals with amounts distributed to beneficiaries.
Non-Compliance Consequences:
- SARS penalties and interest
- Tax mismatches across parties
- Trustee liability for inaccurate or omitted disclosures
- Increased audit risk
Please note that the full responsibility always rests with Taxpayer.
We urge you to act immediately. Failure to comply may result in financial and legal consequences.
COMPANY REGISTERS — NON-COMPLIANCE COULD COST YOU R1 MILLION (OR WORSE)
Companies failing to maintain proper share registers could face fines of up to R1 million — and directors may even face jail time.
Under the Companies Act, every director is legally responsible for ensuring that the company’s registers are:
- Created and maintained correctly
- Available to shareholders during business hours
(Sections 24, 25 & 26(3))
The securities register must be updated as soon as practicable after receiving consideration for shares (Section 40(4)(b)). This is not something that can be delayed until “needed” — it’s a statutory obligation.
Why It Matters
The share register is the legal evidence of shareholding.
If your name isn’t recorded in the register, you’re not legally recognised as a shareholder — even if you paid for the shares.
This has serious implications if disputes arise or if the company faces legal or financial scrutiny.
What Happens If You Don’t Comply?
Failure to maintain registers will be flagged as a reportable irregularity during:
- An audit (APA Act Section 45(1)(a))
- A review (Companies Regulations, Regulation 29)
CIPC will issue a compliance notice, requiring the company to correct the issue.
If the company fails to comply:
- It may face an administrative fine of up to R1 million (Section 216)
- Directors may face personal fines and/or imprisonment
- Shareholders may sue directors for damages caused by non-compliance (Section 20(6))
What You Should Do
If you’ve already prepared a register in accordance with the Act — this is your reminder to keep it updated.
If not, now is the time to act.
The risks of delay or neglect are simply too high.
