☕Morning Coffee with SARS: How Strong Should We Brew It?

☕ The Morning Brew

It’s August.

We’re only halfway through the tax year.

And now your accountant is asking you what you expect to earn by 28 February 2027.

Your perfectly reasonable response might be:

“How on earth am I supposed to know?”

☕

Welcome to provisional tax.

In our last Morning Coffee with SARS, we started with the first important question:

Are you actually a provisional taxpayer?

Once the answer is “Yes”, another question follows very quickly:

What should we tell SARS you’re going to earn for the full year?

And this is where good provisional tax planning really begins.

 

☕ Today’s Blend

Here’s one of the most important things to understand about your first provisional tax calculation:

We are estimating. We are not guessing.

For the 2027 year of assessment, we are currently sitting in the first provisional tax period.

But we aren’t simply calculating tax on what you earned between 1 March and 31 August 2026.

We need to estimate your taxable income for the entire 2027 tax year – from 1 March 2026 to 28 February 2027.

That means looking at what has already happened...

and considering what is reasonably expected to happen next.

A good estimate is not a number pulled out of the air.

It is a considered calculation based on the information available to us today.

 

☕ So, What Goes Into the Cup?

When we prepare a provisional tax estimate, we may look at things such as:

☕ Income earned from March to date

☕ Salary income and PAYE already deducted

☕ Business, freelance or consulting income

☕ Rental income and related expenditure

☕ Investment and other taxable income

☕ Allowable deductions

☕ Once-off transactions or unusual income

☕ Expected income for the remainder of the tax year

☕ Known changes that may affect your income before February

And this is exactly why simply looking at the first six months and multiplying everything by two doesn’t always give us the right answer.

Life rarely happens in perfectly equal six-month portions.

Neither does income.

 

☕ Let’s Stir Things Up

Consider three taxpayers.

The Freelancer

Sydney has already earned R320 000 from consulting work since March.

Can we simply double that amount and assume he’ll earn R640 000 for the year?

Perhaps.

But perhaps not.

Maybe he has already completed his largest contracts for the year.

Or perhaps he has just signed a new contract that will substantially increase his income over the next six months.

The numbers tell us what has happened.

The conversation tells us what may happen next.

☕

The Landlord

Sarah receives rental income every month.

Looking only at the rent deposited into her bank account doesn’t tell us her taxable rental position.

There may also be qualifying expenses associated with earning that rental income which need to be considered.

Her income and her taxable income are not necessarily the same thing.

☕

The Business Owner

David’s business had an excellent first six months.

But he knows that a major contract ends in October and his income is expected to reduce considerably thereafter.

Simply doubling his March-to-August numbers could result in an estimate that bears very little resemblance to what he reasonably expects to earn for the full year.

And that’s the point.

Provisional tax needs context.

 

☕ Your Coffee Checklist

Before we brew your first provisional tax calculation, ask yourself:

✔ Has my income changed since March?

✔ Is my current income likely to continue at the same level?

✔ Have I gained or lost a major client or contract?

✔ Have I started earning income from a new source?

✔ Has anything changed with my rental property?

✔ Do I expect a bonus, commission or once-off payment?

✔ Have my business circumstances changed?

✔ Am I expecting any significant taxable transactions before February?

✔ Are there deductions or expenses that should be taken into account?

If something has changed, tell us.

Sometimes the most important piece of information in a provisional tax calculation isn’t sitting in the accounting records yet.

It’s sitting in your plans for the next six months.

 

☕ A Nil Payment Doesn’t Mean No Return

Here’s another important distinction.

Sometimes, after everything has been calculated, there may be no provisional tax payment due.

But if you are a provisional taxpayer, a nil amount payable does not mean that the IRP6 can simply be ignored.

A nil payment and no filing obligation are not the same thing.

SARS requires provisional taxpayers to submit their IRP6 returns for the first and second provisional tax periods, even where the calculation results in R0 payable.

This is why we first determine whether you fall within the provisional tax system, then prepare the appropriate calculation and attend to the IRP6 accordingly.

Or, in coffee terms...

An empty cup doesn’t mean there’s nothing left to do. ☕

 

☕ One Final Sip

Good provisional tax planning isn’t about predicting the future perfectly.

None of us has that crystal ball.

It is about taking what we know today, considering what we reasonably expect tomorrow to look like, and arriving at an informed and supportable estimate.

In our first Morning Coffee with SARS, we asked:

“Is your cup half full… or half taxed?”

Now that we know who needs the coffee, the next question is:

“How strong should we brew it?”

At Exponential Brilliance, we believe provisional tax should be more than a rushed calculation shortly before a deadline.

It should be an opportunity to look at where you are, where you’re heading and whether your tax position still makes sense.

Because good tax planning starts long before SARS pours the final cup.

 

☕ Let’s Have Coffee

If you’re a provisional taxpayer, now is the time to look beyond what you’ve already earned.

Think about the next six months.

What’s changing?

What’s growing?

What’s slowing down?

What do you already know today that your accountant couldn’t possibly see from the numbers alone?

Tell us.

Those conversations help us brew a much better estimate.

So put the kettle on, pour yourself your favourite cup of coffee, and leave the tax brewing to us.

We’re always happy to have coffee with you – even if it’s only virtually.

☕

The coffee’s on us. The tax expertise comes standard.

Exponential Brilliance

Brewing better tax decisions, one cup at a time.