What is it Personal Income Tax?
Income tax is the normal tax that is paid on your taxable income.
Examples of amounts an individual may receive, and from which the taxable income is determined are:
- Remuneration (income from employment), such as, salaries, wages, bonuses, overtime pay, taxable (fringe) benefits, allowances and certain lump sum benefits
- Profits or losses from a business or trade
- Income or profits arising from an individual being a beneficiary of a trust
- Director’s fees
- Investment income, such as interest and foreign dividends
- Rental income or losses
- Income from royalties
- Pension income
- Certain capital gains
Who is eligible for Income Tax?
You are liable to pay income tax if you earn more than:
For the 2018 YOA (1 March 2017 - 28 February 2018)
- R75 750 if you are younger than 65 years.
- If you are 65 years of age or older, the tax threshold (i.e. the amount above which income tax becomes payable) increases to R117 300.
- For taxpayers aged 75 years and older, this threshold is R131 150.
For the 2017 YOA (1 March 2016 - 28 February 2017)
- R75 000 if you are younger than 65 years.
- If you are 65 years of age or older, the tax threshold (i.e. the amount above which income tax becomes payable) increases to R116 150.
- For taxpayers aged 75 years and older, this threshold is R129 850.
For the 2016 YOA (1 March 2015 - 29 February 2016)
- R73 650 if you are younger than 65 years.
- If you are 65 years of age or older, the tax threshold (i.e. the amount above which income tax becomes payable) increases to R114 800.
- For taxpayers aged 75 years and older, this threshold is R128 500.
You don't need to file if your total salary for the year before tax is not more than R350 000, provided:
- You only have one employer (but remember if you have two employers or income sources e.g. late spouse / partner pension income, exam markings income, rental income, moonlighting income etc. you do need to file even if the total is still under R350 000)
- You have no car allowance or other income
- You are not claiming tax related deductions (for example medical expenses, retirement annuity contributions, travel expenses, etc.)
- You received interest from a source in South Africa not exceeding:
- R23 800 if you are below the age of 65 years
- R34 500 if you aged 65 years or older
- Dividends were paid to you and you were a non-resident during the 2016-year of assessment.
What steps are required to ensure compliance?
Step one: You must register for income tax
If you earn a taxable income, which is above the tax threshold, you must register as a taxpayer with SARS.
If you were not yet registered you would only be required to visit a SARS branch once to verify your identity, address and bank details. All additional tax registration can be performed from eFiling without having to visit a branch again.
It is important you have all the supporting documentation when registering.
Step two: You must submit a return
If you are registered for income tax, you will be required to submit an annual income tax return to SARS.
When completing your return, you will require the following documentation in order to verify the existing, pre-populated information that appears in the return, as well as to complete any remaining portions:
- IRP5: This is the employees’ tax certificate your employer issues to you
- Certificates you received for local interest income earned
- Any other documentation relating to income received or accrued, such as remuneration that has not been reported to SARS by your employer, or business or investment income, etc.
- Details of medical expenses paid and medical scheme contributions made
- The relevant certificates reflecting your retirement annuity fund contributions made
- A logbook and other documents in support of business travel expenses (if the travel allowance is part of your remuneration or if you have the right of use of a company car taxable benefit)
- Any other documentation relating to the allowable deductions you wish to claim