August often lands a VAT return and your first provisional tax return in the same two weeks. Two different tax bases, two different payment dates, one bank balance. The way through isn't more cash, it's a deliberate sequence.
VAT is a transactional tax: the difference between what you collected from customers and what you paid on business expenses. It was never your money, it's SARS's money passing through your account. Provisional tax works differently, it's based on your estimated annual taxable income, forecast forward and paid in two instalments across the year, the first due 31 August if your financial year ends in February.
Because VAT looks backward at completed transactions and provisional tax looks forward at an estimate, treating them as one combined cash flow problem is where businesses get into trouble.
Close July's accounts in the first week of August and calculate your VAT liability immediately, so you know exactly how much is ring-fenced before anything else happens. Once that's settled, use the same clean data to review your actual profit from March to July. From there, forecast the remaining seven months with your accountant to build the IRP6 estimate. File and pay VAT mid-month rather than waiting, then give the final week of August entirely to the provisional tax payment.
It's tempting to underestimate provisional tax to protect short-term cash, particularly with a VAT payment landing in the same window. SARS doesn't treat the two sympathetically. If your taxable income is over R1 million and your estimate falls more than 20% short of the actual figure, the underestimation penalty applies regardless of how tight August felt. Under R1 million, you need to estimate at least the basic amount or 90% of actual. A conservative, accurate IRP6 costs less than the penalty for guessing low to ease a cash crunch that's really about timing, not profitability.
Close and calculate VAT in the first week. Know the exact liability before you plan anything else for the month.
Use post-VAT data to build the IRP6 forecast. Real March-to-July figures beat a rough guess for the remaining months.
Stagger the submissions. File and pay VAT mid-month, then focus the final week entirely on provisional tax.
Don't underestimate to ease the squeeze. A deliberate, accurate estimate is cheaper than an underestimation penalty later.
In theory SARS allows credit transfers between tax types, but the process is rarely fast enough for a looming deadline. Settle provisional tax in full by 31 August and don't wait on a refund to clear.
SARS applies a 10% penalty on the outstanding amount immediately, plus accumulating interest. If cash flow is the issue, submitting on time and requesting a payment deferment is a better path than missing the deadline outright.
You can use the basic amount as a starting point, but if your business has grown, relying on it alone risks an underestimation penalty. A current review of your actual figures is the safer approach.
Two deadlines in one fortnight is a sequencing problem, not a crisis. Settle VAT early, use that clean data to build an accurate provisional tax estimate, and give the final week to the IRP6 payment. For related tax guidance, see our blog, and current SARS deadlines.
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