The individual tax year in South Africa ends at the end of February. Several decisions only count for the year if you make them before that date. After the 28th the year is closed, and you can no longer change the figures for it. Use the weeks before year-end to go through the checks below.

Review your provisional tax estimate

Your second provisional payment is due at the end of February, and it has to be a reasonable estimate of your full-year liability. If it's too low, SARS charges a 20% under-estimation penalty on the shortfall, on top of the tax itself. Before year-end, look at your actual figures for the year and update the estimate to match them. Last year's figure or a round number can leave you short.

The February provisional payment is the last chance to settle the year's tax estimate before the year closes. Base it on your year-to-date figures to avoid a 20% penalty on any shortfall.

Retirement-annuity top-ups

Contributions to a retirement annuity are deductible within limits, in the tax year they are paid. You can deduct up to 27.5% of the greater of your taxable income or remuneration, capped at R350,000 a year for the 2026 tax year (SARS adjusts these annually). If you have room in that allowance and the cash available, a top-up before end-February reduces this year's taxable income and adds to your retirement savings. A contribution paid in March counts against next year.

Using your retirement-annuity allowance before year-end

Say your taxable income is R600,000 and you've contributed R60,000 to your RA so far this year. Your 27.5% ceiling is R165,000, so you have room for more. A top-up paid before 28 February comes off this year's taxable income. The same amount paid on 1 March goes into next year's return. Check your remaining allowance before you pay in a lump sum.

Writing off bad debts

Review your debtors. An invoice you can't recover can be written off against income, and it has to be recognised as bad in the year to reduce that year's profit. Year-end is the time to decide which debts can't be recovered, such as a client that has closed, a client that hasn't replied for eight months, or a dispute that won't be resolved. Writing them off stops you paying tax on income you won't receive. SARS treats a bad debt written off differently from a general 'doubtful debt' allowance, which is applied more narrowly. Write off only the specific invoices you know are lost, and keep a short note of why each one was written off in case SARS asks.

Stock and asset timing

  • Stock: your closing stock at year-end feeds directly into your taxable profit. Higher closing stock means higher profit and higher tax. Count it accurately, and value obsolete, damaged or unsellable stock at the lower amount it can now be sold for.
  • Assets you need to buy: if a needed purchase is coming up, its timing relative to year-end affects when the wear-and-tear deduction starts. Bring forward a purchase only if it makes commercial sense. Buying something you don't need costs more than the deduction gives back.

Timing a vehicle purchase you have already planned

You need a new delivery vehicle and will buy it in the next couple of months. Buying it before year-end can start the wear-and-tear claim a full year earlier. The deduction depends on a real business need for the vehicle.

20%
Under-estimation penalty SARS charges on the shortfall if your February provisional estimate is too low

Decisions that must be made by 28 February

Once the year has closed, you can't make a deductible RA contribution for it, write off a debt in it, change stock or asset timing for it, or improve a provisional estimate already submitted. In March you can still file returns and pay. These decisions have to be made by 28 February:

  • RA top-up: deductible for this year only if the money is paid before 28 February.
  • Bad debts: must be recognised as bad within the year to reduce this year's profit.
  • Stock and asset timing: the stock count and any planned purchase have to fall before the date.
  • Provisional estimate: the February submission is your chance to correct it and avoid the 20% penalty.

How much a deduction saves

A deduction returns only a fraction of what you spend, equal to your tax rate on that amount. If you spend R10,000 on equipment you don't need, you save about R2,700 in tax and are R7,300 worse off. Planned spending timed around year-end makes sense. Buying something only to reduce the tax bill leaves you with less money. Each item on this list should be a sound business decision before it is a tax decision.

Bring your books up to date first

Each of these checks depends on knowing your position, so your books need to be up to date before the 28th. A year-end review can only be as accurate as the figures behind it. If you want us to review your provisional estimate, your RA allowance and your debtor and stock position, get in touch in early February, so that there is time to act before the year closes.