A two-tier system with different rules for smaller and larger taxpayers has been introduced, effective 2nd 2010 IRP6's.

For tier 1, the tier applicable to "smaller taxpayers", the old "basic" amount safe-harbour system has been re-introduced. Smaller taxpayers" were defined as taxpayers with a taxable income below R1m. The basic amount is the taxable income reflected in the most recent assessment received from Sars.

The tier 1 provisions include the 20% penalty for estimating below the lesser of basic amount and 90% of actual taxable income. However, the basic amount will now include an automatic annual 8% increase.

For the tier 2 "larger taxpayers", the current requirement of 80% of actual taxable income would be retained but the 20% penalty would be discretionary rather than automatic."This means that Sars will no longer be able to apply an automatic penalty; it will instead be obliged to consider whether or not the taxpayer intended to delay the payment of provisional taxes.