The Basics of Individual Income Tax in South Africa
- Simónne Roodt
- Feb 25
- 5 min read
I have always wondered why Income Tax was/is not a compulsory subject in school as part of life orientation. Every tax resident in South Africa must comply to the rules and obligations as set out by The Income Tax Act (58 of 1962), but without the necessary guidance or research it is very easy to navigate through life without staying compliant to these requirements. The South African Revenue Service (SARS) has become very strict on non-compliant taxpayers by imposing hefty penalties and interest on late submissions, non-submissions or incorrect declarations varying between 10% to 200% of undeclared income/tax implications.
I have thus taken the time to set out a few very basic guidelines on how Income Tax in South Africa work and what your obligations as a taxpayer in South Africa entails. As always, you are welcome to reach out to us with any enquiries that we can assist with or for any further guidance on your specific situation.
Who needs to register for Income Tax in South Africa?
Firstly, no one is automatically registered for income tax, this is done manually through either a SARS branch, E-filing or E@syfile. Secondly, there is not a specific age where you become liable to register. The moment you start earning an income (excluding of course pocket money from your parents) you need to register for income tax and declare this to SARS. Lastly, always remember that a financial year runs from 1 March to 28 February. The financial year we are currently in, for example, started on 1 March 2024 and will end on 28 February 2025. Similarly, the next financial year starts on 1 March 2025 and will end on 28 February 2026.
There are however certain exclusions where SARS does not require for a taxpayer to submit an income tax return, but in various places in your life you will need to declare your income tax number as statutory information like when opening a bank account, applying for finance, applying for a job, registering a company, etc. I would hence recommend you get an income tax number the moment you finish school/your studies to have this in place when it is needed.
The exclusions where SARS does not require for a taxpayer to submit an income tax return:
If you earn under R350 000 for a full year of assessment from one employer (gross earnings before tax) and have no other sources of additional income (for example, interest or rental income) and no deductions that you want to claim (for example medical expenses, travel or retirement annuities), then you don't need to submit an annual income tax return.
I do however have a different opinion on this for the following reason: When you earn a salary from an employer that is noted on a monthly payslip, your employer is obligated to file an IRP5 certificate for you at year-end. This IRP5 certificate is then linked to your ID number and will hence automatically pull through on your income tax return once opened. The same goes for interest on an investment or bank account, medical aid contributions, withdrawals from a retirement annuity fund, etc. I have experienced that when SARS (or rather E-filing which is an automated program) picks up that there is information appearing on your return (without you having to declare it as mentioned above), they expect you to file the annual return for the year in which these income or contributions were incurred. On your Tax Compliance Certificate, it will reflect that you are not compliant due to outstanding returns and SARS will also raise penalties on late submission if you miss the deadline.
In my opinion, I would hence suggest that you file every year and stay up to date, irrespective if you earn less than R350,000 per annum (R29,167 per month) just to ensure that you are always tax compliant, and that SARS will not surprise you with accumulated penalties that you were not aware of. Who knows – You might be getting a refund after filing! It’s a win-win.
How do I file my tax returns?
As mentioned above, the financial year ends on 28 February. The annual filing season then opens for submission in July that same year (normally around the 16th) and will be open until October of that same year (normally around the 21st) for non-provisional taxpayers. Provisional taxpayers have time to submit until January the following year (normally around the 20th).
There are a few ways to file your return, including:
Going to a SARS branch
Through E-filing
Through the E-filing Mobile App
The most popular way is through E-filing (option 2). Every taxpayer needs to create their own E-filing profile (or they can do it through their accountant who typically has a Tax Practitioner profile). If you follow the link below, you will choose “Register” after which you will complete all your information and submit specific FICA documentation, including your ID, proof of residence, proof of bank account and a photo of yourself holding your ID. Once this process is completed, SARS will confirm within 21 working days whether your profile is successfully activated.
How is my income tax calculated?
Income tax for individuals is calculated on an “Income Tax Bracket”. The more you earn, the higher tax rate you’ll pay.
There are certain exclusions, deductions and rebates that may get a bit more complex, but rest assured – I am here to help!
Exclusions typically include the annual interest exclusion (R23,800 if you are < 65 years, R34,500 if > 65 years of age), foreign investment income exclusions, local dividends, reimbursive travel allowances, subsistence allowances (under certain conditions), bursary allowance, etc. An exclusion means that this income is exempt from taxable income.
Deductions will mostly be contributions to a retirement annuity or pension fund, submitting a logbook when a fixed travel allowance or the right of use of a motor vehicle as a fringe benefit is included in your IRP5, a big variety of expenses if more that 50% of your income earned is commission in source, etc.
Rebates includes a medical rebate (this only applies if you are the main member who contributes to the medical aid, or if you can prove that you make the contributions yourself even though you are not the main member), foreign tax rebate on foreign income, and then also the primary/secondary and tertiary rebate. The last mentioned is a rebate that every tax resident in South Africa are entitled to. The rebates are used to lower your income tax payable (not your taxable income) and is limited to R0, meaning that it can not create a refund from SARS. It can only reduce your tax payable to R0.
Primary rebate for persons younger than 65: R17,235
Secondary rebate for persons older than 65, but younger than 75: R26,679
Tertiary rebate for persons older than 75: R29,824
Medical rebate (R364 per month for the first two dependants plus R246 per month for each dependent after that)
I believe I covered most of the topics that I think a tax resident in South Africa should be aware of. There are of course a lot of other information that might be applicable to yourself, such as operating a sole proprietorship (an unregistered business in your personal name), earning and working abroad, capital gains of the sale of assets, working from home and claiming a home office expense, etc.
I would love to answer all your questions and assist you with getting your tax matters up to date so that you do not need to feel concerned. Please feel fee to reach out to me on the contact details provided on the website.
I look forward to hearing from you!
Best regards,
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