Tax Planning for Medical Doctors – Provisional Tax or PAYE

My name is Constance Kawelenga and I am a registered Chartered Accountant and Auditor, and today we’re going to talk about the tax planning opportunities available to medical practitioners.

Doctors are high-net-worth income earners. That means there are a lot of aspects that need careful planning, together with their accountants. 

An important one is with respect to their tax liability. Everyone has a statutory obligation to pay their taxes, and income tax is one of these. There are 2 main methods used to pay income tax in South Africa, namely, provisional tax and PAYE.

Below we will cover the differences between provisional tax and PAYE and which, as a medical practitioner, is suitable for you.

Provisional tax

Provisional tax is a method of paying the income tax liability in advance, to ensure that the taxpayer does not have a large tax debt on assessment. It is not a separate tax from income tax but allows the tax liability to be spread over the relevant year of assessment. Provisional taxpayers are individuals who receive other sources of income other than a salary.

Most salary earners are not provisional taxpayers if they have no other sources of income. The South African Revenue Service (SARS) requires provisional taxpayers to pay at least two amounts in advance during the year of assessment, based on estimated taxable income.

A third payment is optional after the end of the tax year but before the issuing of the assessment by SARS. On assessment, the provisional payments will be offset against the liability for normal tax for the applicable year of assessment. 

It is important to be as accurate as possible in estimating your provisional tax payable. A penalty will be levied if the actual taxable income is more than the taxable income estimated on the second provisional tax return. The penalty amount depends on whether the actual taxable income is more or less than R1 million. In addition, interest will be levied on the understatement. 

Pay-As-You-Earn (PAYE)

Pay-As-You-Earn (PAYE) is a tax system used in South Africa to collect income tax from employees. If you are an employee, this means that your employer will deduct a portion of your salary each month to cover your income tax liability. This system is designed to make it easier for you to pay your taxes throughout the year, rather than having to pay a lump sum at the end of the year. 

Provisional Taxpayers vs. PAYE 

There are pros and cons for each. 

If the doctor is disciplined, they can pay provisional taxes. To do this, they MUST set aside an estimated amount for provisional tax every month. Given that the amounts may be significant, it is a good idea for them to invest the funds in the money market as this is a short-term and safe form of investment, so that they can earn interest on the funds while they wait to pay the funds after 6 months. 

The con is that the doctor might not be disciplined enough to set aside the funds, and this might result in not meeting the financial obligations when they arise, and this has consequences. 

Self-knowledge is important, and therefore if they prefer the monthly discipline of paying the funds to SARS, then they should rather register for PAYE and set up a payroll system where they declare a regular salary.

The salary doesn’t necessarily have to be the same every month – and the payroll system can easily calculate the correct PAYE regardless of the irregular salary system. Of course – this means they have to start paying UIF and this adds to the admin, but the UIF amount is relatively insignificant and the admin pain is really once-off at registration.


In conclusion, as a medical practitioner, choosing between provisional tax and PAYE depends on your financial discipline and preferences. Provisional tax offers flexibility but demands proactive financial planning, while PAYE provides a structured, hassle-free approach.

At Zuva Financial Services, we specialize in addressing the unique financial challenges of medical professionals and can assist you in making the right choice. If you’re seeking expert tax guidance and comprehensive financial & accounting solutions, contact us today for a consultation. Take the first step towards financial security with Zuva Financial Services.