If you do not get a regular salary from your company than you probably have to pay provisional tax. The idea of provisional tax is that you pay the tax in advance so you do not have an overwhelming tax bill at the end of each tax year. Salaried employees pay PAYE or Pay as You Earn tax monthly and claim back, based on expenses and other deductions, every year. Self-employed people, freelancers and contract workers might pay provisional tax. You could also pay provisional tax if you earn income from rentals or interest on investments.

The last thing you want to do is fall behind with tax payments. Tax debt will never go away and will continue to accumulate. The sooner you pay it off, the better. Apart from the stress of having SARS on your back, there are also penalties if you pay late. If you have not budgeted for provisional tax payments, a personal loan might be the best option.

It is not an ideal choice as while you are paying off the current loan, you will be building up more money that you owe to SARS. If you leave it, it will just become a vicious circle of debt and payment. If you are in a position where you owe money for provisional tax payments and you do not have cash available, consider your options carefully.

You can approach SARS and try and come to some sort of payment arrangement. This could still prove to be a costly exercise as there will be interest and penalties involved. If you feel that a loan is the best option, make it a short-term loan. You do not want to pay off debt for provisional tax for years as you accumulate more tax obligations.

It is important to weigh up the cost of the debt versus the cost of paying your provisional tax late. If it is less expensive to take a personal loan then that will be a good option. Try to keep the term of the loan short and improve your provisional tax payments in order to prevent a repeat of the same situation in 6 to 12 months.

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